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tv   Fast Money  CNBC  April 2, 2012 5:00pm-6:00pm EDT

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bell. i hope you will follow me on twitter and google plus. stay with us because fast money begins right now. >> here are the top three trades. the sell off is overdone. looking for high yield and fast money portfolio with the head of high yield investing and farming for profits. unveiling the pop pick for 2012 and banging the drum on shipping stocks. this is fast money and let's kickoff the second quarter and stocks actually closing on the s&p as well as the dow at 52-week highs. all good things to come. >> the first two weeks are a great time to invest and they felt like last week. we started to get that momentum into the day on not a lot of
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news. we had fantastic pmi officials and not so good pmi and took the temper of the complex and european was not that great. and what you will see is are people continuing to ride this higher. i don't think you fall in love with this and you start it get to a place where you had valuation issues. we know what's going on over the last couple of years and we know at least for emerging markets is a challenging time. the allocation is significant and you have more left in cyclical and commodity names. the rotation under performed. >> only a valuation issue if they don't rise along with it. we will start the earnings issues and morgan stanley is there and he said he needs to see earnings estimates rise in order to support where we are in the markets.
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>> that has been the theme for the few quarters. i couldn't disagree, but to tim's point, this is looking like the 1370 level we saw a month ago. here we are at the 14 and a quarter level. let's call it that. if we somehow can trade sideways into earnings, i will say probably what i said back a month and a half okay and the market dos not give you this much time to sell the highs. it didn't give you that much time at 1370. the bears hoped for maybe a big push higher tomorrow followed by a sell off off the back of the fed minutes. the bulls got a hope and they go sideways for a week and taken overbought condition making neutral for the next umph. >> we used that term twice. it's a financial term. of course we use it twice. >> trade school. >> where do you stand at this
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point? >> i got a lot, but not your kind. >> not everybody. >> it's a georgetown thing. we talked about it and a bull rally based on a lot of great factors. macro factors and fed-induced facto factors. at some point you have to ask when this rally starts to fade and the adages that you go away in may and so i would be more cautious here on the long side given where we have been. >> it will all hinge on the employment side. more so than the fed minutes. the end of the week in particular. the adp i believe will be strong again. the question is whether that matches up with what we get from the bls at the end of the week. i would point out that the volumes, a lot of folks are focused on volumes on days like today when the market puts on
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good numbers and they look at it and say volumes are light. to me in is not the case. you look back to the options and people are still trading and fresh money is going in. the apple when it's $550 a share, when it's trading 22 million at $619, that's a different animal. apple did put on 19 billion in market cap. it was down about 15% and that's not a problem. >> got the exchanges or overall volume? >> it's the dark pools that strip that off. >> is it the problem that they are out of stock funds and $15.5 billion came out of funds into bond funds. do we need to see that. you get 50-50 and make the case
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saying for obvious reasons, people are going to reallocate back in. >> what we have seen with the dollar, you are 60 points away from the decent buy. i think that would introduce something that would not participate. the seco and copper producers and they are minting money. they have under perforeigned in the game and starting to get gold at liquidation and the goldminers heavily traded. these are trades i think you can find and you want to look at the high quality yield-driven trades people are still looking for. they will rotate to the names. >> not too long ago, i'm curious
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what the trade for the quarter is. >> pfizer is recommended and that's where money goes to die. >> if you win $474 million, that's where you put a lot of it. in pfizer. >> this is the only place in america where i'm the tallest gay. here's what i would say more broadly than a hedge fund and the large cap u.s. multinationals with yields above the treasury. in that three zone, they seem to be in good places. a fizer and a phillip morris and companies like that will do well in this market. there is downside volatility. many of the options dervegs, any unusual activity today? >> we did see unusual activity in the names you would expect. the s&p was up a ton and they were up unusual on a monday.
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vicks just refuses to be below 14. it doesn't want to be there and partly because of the reason that the guy discussed. the market really is facing a head wind. it is slightly overbought here. i'm bullish and the market goes up on good news and no news and when it gets bad news, it doesn't go down. people are getting the opportunity to buy protection and they take it and they keep it above 15. >> let's move on here. visa dropping the process of global payments as a service provider and they acknowledged that 1.5 million numbers were processed. they are concerned that they are overdone at this point. they join us with much more in terms of the direct impact, that can be quantified. a bigger precaution of the unquantifiable impact. it lost the market cap and if
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you look at that relative from the business from the bleach, if you look at what we haven't been able to determine, there a million and a half accounts that have been impacted. what's the ultimate impact of the business. there has been certain instances where it's as little as $2 per account and as high as $200. it's wide between $5 million to $200 million. we think the range will be closer to the lower end maybe 100 to $150 million range. that's what people are trying to focus on the the key is how quickly they will be able to return to status. ultimately they will impact how they perceived them. you obviously never want to see something like this happen, but in the past they occurred and it will be how they react to that. >> do you anticipate it will be a service provider and therefore
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the sell off was overdone. the market likes the most in my mind uncertainty and the stock was friday and that was the last day of the quarter. there was probably penalty follow-through in the stock and people were surprised by that. they were supposed to announce two factors they had to absorb and to the extent they can demonstrate they contained that and it's 1.5 million accounts and they can get back to the beings, it will help significantly. >> put numbers on and right now the global payments and trades may be 11 1/2 or 12%. that's a steep discount to mastercard and visa. i don't think they deserve that kind of premium. where can we look at that? >> we need to look at it relative to mastercard and visa, but the services trading at about 16 times. the stocks were at $57.
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that is 15 times the estimates. the key will be what's the ultimate implication from this breech? one thing i think the market tends to not give the company credit for. these are small to medium sized merchants in addition to the processing they do. the monthly record keeping with the relationships they got for many years. the cost of switching while people think it's not much, there is a business disruption. >> they speed up the adoption. >> i think so. >> great to have you with us. thanks for your time. >> global payments and one of the companies that karen pointed out the move that will be a higher security if used overseas already. gpn is one of the companies that
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would benefit from the adoption of this higher security product. >> another name that i would like to throw in is western union, about as old school as it gets. payments and transfer c to c business. this is now almost 60-40 international to domestic where this was a u.s.-based business train. massive values and the question is, is this a value trap. they need to return cash and that's what you need to watch. this is not an expensive company. we can take a shout out. >> if you can scale into this one, this one being noble payments, i would scale into it. i don't think you get that many chans on a stock that has that much of a monopoly. when you talk visa and mastercard, you are talking such a big chunk that you buy this on this dip and you can pick it up
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as the gentlemen said several points cheaper and obviously i think they have a good future after it sustains this. >> one obvious concern is the contingent liability associated with the exposed names and i think that's an issue that will weigh on the term, but this is a global franchise and monopoly-like characteristics. i think you need more crisis guidance for management and in terms of a tylenol fix of what's going on. hopefully they will do that. >> the next trade, the big event with the release of the minutes for hints about raising rates of the future. the senior economic reporter steve leesman has the details. what are you anticipating? >> people are wonder being a replay of the last minutes that shocked the market, but the market sold off. they thought there was going to be more instants of qe 3 and a divided fed and a similar look. there was a group of members of
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the fed who think whatever the current forecast is, it does not call for that as the fed ought to do more. there was a growing wait and see contingent. the new thing that will be added is more discussion on what the fed should do when operation twist ends in june. about the time they should have been discussing that, it am cans to a head in april. i don't think it came in the last meeting, but the news will be -- by the way, you are looking at a fax simly of a twist. it's two different classes of securities. those that the fed owns are 91 days to a year. they are declining and you can see it buying securities of years plus on the long. not all of it. the total amount of securities they own is declining and somewhere between three and six months of operation twists
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continuing in the balance sheet and how long did they go? the discussion comes to a head in the april meeting. >> isn't that transfer because they are coming off the books? they want to be in the long end. >> that's part of what's happening. they don't want to raise the balance sheet. that would be quantitative easing if you put that back up. you can see that last chart. what you saw is not much increase at all in the balance sheet. some increase a little bit, but it has to do with the technical aspect. they are trying to keep a total size and more or less even and not pumping additional liquidity in the quantity. >> steve leesman on headquarters. usually with tomorrow's release, are you anticipating ino increased volatility in the markets.
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they slow down the exit of that data to the rest of us. they will see an effort like that being made. that's what he wrote about and that was ongoing for two years and now we will get two more examples this week that the fed minutes and the bls on friday. >> one macro point quickly, november of 2010 and fed induces qe 2 and they pull it in june and market retraces. they will be very, very careful when they come off at the end of the nguyen. >> they are getting an student in high yields right now. more fast money straight ahead. the most spectacular experiences are happening here.
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>> that's not a surprise because of this bid, but it was surprising that we have retail investors completely betting that any pop out of avon is there to be sold. institutional investors were the ones with confidence saying this will justify a higher bid either by cody or somebody else. they were buying the 24 calls in may and institutions were the big block trades and 1,000 contracts and that kind of stuff. the deadlocks were also selling calls and both sides were buying puts to protect that. >> just in terms of quick take or the bid itself, a lot of people were dismissing this as not being a real bid.
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he is a cosmetics distributor and makes a ton of sense. i think that's really what's going on here. avon has been dysfunctional for the last however long. they need to change so they can review the deal appropriately. this deal is not dead. i certainly don't think it should be dead. >> time for fast money portfolio. jim managing $28 billion in high yield income at black rock. where is he seeing opportunity? great to see you. you like high quality corporate debt at this point? >> i like high yield right now. more of a short duration of fixed income and corporate credit. we are going through an economy that is deleveraging. the biggest question is the pace and path of deleveraging.
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in you look at today, the front end at and taking just as much risk with the fed traying to create to offset the public sector and you think about corporate profits and to two year duration and it looks pretty attractive. >> how crowded it is this. they have done fantastic numbers and dedicated guys in the space and cross over money. corporates look healthy right now. >> i'm a believer that fundamentals drive flows. >> the reality is the downside risk. when they moved in december, they reraced the tail risk. what you have seen is you had an upside in growth and not just
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the high yield market, but stocks have gone up. people are investing in the upside of profits. high yield at 1%. they were going into a recess n recession. they are accommodative and certain for this year. you are looking at an upside where they are growing. >> what are the near term shocks? >> we have a global debt problem at 30 year prices. when i think about the short-term, different things that can happen and starting to
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shift around the world. the fiscal policy a year ago was in question. and in the sense that the new governments are in the periphery. >> what do you think? >> it's oil. obviously a situation that can detrail profits or contumgz. >> those are things. >> something can change with an election. >> in terms of the sectors, energy and oil. why the two sectors? >> owning oil is a good hedge on the risks. i think it's attractive in the sense that in 2007, 2008 many restructure and had healthier balance sheets. it's a depreciating asset. the average life of a car in the u.s. is about 11 years. i think about where we have come
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down to and it's still a vehicle and still something that they will have to come out of. >> keeping the average. >> that pepper still lives. >> hope to see you back here soon. jim from block. coming up next on fast, shooting higher and taking positions on the automakers ahead of the monthly sales reports. [ female announcer ] it's time for the annual shareholders meeting.
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sales are small cars are expected to report the march sales tomorrow. they continue to climb and phil le bow is here in person. >> that's the whole stock. >> this is monumental. at least three years. >> they don't let the mid-western boys out much. >> they will print over 15 vehicles. >> we talked with several dealer groups and they said they had a huge, huge saturday and sunday. not all sell on sunday, but some do. if this is true, you will see a sales pace close to $15 million. you may not get close to february, but that's big final weekend for the month. what was the peak?
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17 or 18? >> you have to go back to 2000. there were a couple of months that were up over 20. the sales pace, you are looking at i high 17 millions. the auto makers that ford and gm have not been robust. >> the last three months have been nice. >> better. >> some space like auto parts have been unbelievable. in terms of conversations that you had, they are the ones i talk about more than anything else. if you saw the sales numbers i'm seeing from ford and gm with turbo boosters, ecoboost is one of the top selling add ones. they want the performance you get and you have that growth
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continue to ex-plot. >> is spot on and i teed him up for that question, but it's been amazing what the stock has done. it's close to 86 today, up within a whisper of an all time high and power train. that business is 9% growth as opposed to 09 and 2012. once he figures that out and said here's what we are closing. they have to idle them or close them out right.
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once they figure that out, people will look at where gm is headed in terms of sales and say this is unbelievable where this company is at and where it should be. >> how do these strong u.s. numbers dove tail with what's going on in the rest of the world, namely china and europe? >> europe is slowing down and china is expected to continue to grow although we have not seen the rate of growth this year that we have seen in the past years. when you talk with people in china, they say don't worry about it. it's a matter of you can't expect to see the huge double-digit gains. are as far as annual targets go, will these guys be on track to hit the targets still? >> yes, they are. >> watch what we will see in asia. that is often lost because of the focus on china. >> any sexy cars at the car show? did you see the flying car plane?
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>> i did. they are not giving a license for that. >> there is a height requirement. i said that out loud? >> there it is. >> always great to see you. >> good to be here. >> more often than every three years at least. >> it's a fun show. great to have fun. that's unbelievable. >> it is unbelievable. let's hit the "options action." you have a trade on car max. >> right. car max is a name that didn't get mentioned announces earnings later this week and saw big call buying in car max. i think this is a move to fade. the options have gotten expensive. the way to take advantage is to
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sell with call spreading and that's april 36 to 36 call spread. i can sell that for about $1. the april 34 call, everybody was rushing and i can sell that for $1.60 and define the risk for about 80 cents. i'm risking a dollar to make a dollar, but this makes a little bit of money even if the stock goes up and makes money if it goes sideways and the entire dollar goes down, i love the options spreads in front of earnings and this lines up more. >> more options trades at 5:00 eastern on options actions. we are off this friday the it's good friday. everybody is off except "squauk box." investing your millions, if you won the lump sum and cannot have to share it, you have been breaking down the vibes. >> anthony said dock, what
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should i do with the money, she allocating to do that. >> yes, i did. i would buy 15 million shares of at at&t. >> do i make the height requirement? >> yes. 15 million shares of at&t with the millions. that's how much you can buy. it does pay. you make about $26 million a year. like i said, 5% and you still got preferential tax treatment on the dividend. that's one thing i take a look at. another thing is the karma. we had somebody show up at the show in california. they run for about $100,000. you can buy $4700 of those cars and cost you $331,000 according to the mayor. if you want a name, every ticker tame for the next 1,000 years. you can do that because you can host 1400 of these.
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>> wow. >> lastly you can buy about 9400 marquee jet cards. $50,000 card you can buy 90 or 100 of them. i think the people who won this prize come from towns of less than 9400 people. so they can buy a 50,000 jet card. >> or all of england. clean that mess up. >> and a few cases of scope. >> thank you. there you go. >> he is making fun of a whole country of people. . >> they may have a sense of humor. >> figures he would. coming up by disasters on the mortgage market. you will never guess who is getting ready to get back in. more fast.
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aig is getting back in the risk game looking to buy up home loans as an investment vehicle. let's bring in paul newsome,
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analyst at sandler o'neal. what's your take on the change in portfolio. >> it's diversifying the portfolio and it's got to be careful and we know they have problems with mortgages in the past. >> have you contacted them to get their take on what their strategy and intention is? >> the best of my knowledge is it's a small piece of what they are doing. they have a rather large portfolio. >> they have a large piece, is this increasing the risk in your view or can it be done as not increasing risk at all? investors want them to derisk the portfolio, right? >> i agree. investors want to continuey derisk through the perspective as well. this could be helpful if it
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further diversifies, but it's a matter of size. right now it's obviously small. things can dplanj an investment persective. >> what's the return on something like this? what are they targeting in terms of buying investments? >> i don't know what the hurdle rate can be. i will be the mortgage products. >> in terms of the coverage and coverage universe, from aig, it's trying to play stock market given that if you put back out the splits, here was a $1500 stockish that is now $30 and basically moving sideways. how about within your coverage universe and decent dividends seems to have a better business model and what do you think about aon? >> i think they are different creatures.
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aig i agree is a macro player on the stock market and they are in general. it's much more of a play of what's going on with the insurance business and a pricing perspective on a global basis. i have reservations because of what we are seeing with better pricing in the u.s. >> we have to look at it. what is the top trade for q2. the commodities king and contributor of the world renowned joins us now to give us the playbook. top trade with 2012. >> the best is agriculture going forward. agriculture and the ability to shift around the world. those are the two things we need to pay attention to. the biggest corn crop the united states has seen.
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a monster crop and the biggest amount of acreage in the corn since 1937 and back then all it grew was about 30 and we are growing 165 bushels and useing it and exporting it with baltic freight down where it is. you want to own agriculture and the shipper who is move that. >> the volatility in the space is tough for a lot of investors and it should be along for the ride and saw where they went. how do you handle that and how do you look at the stomach people should have in terms of holding them? >> it's hard, no question. the way i have done it was not a good day, but it's a good month and a half. to own the names and hedge them with futures and that gets sophisticated and takes out the volatility of the market itself. none the less, these are stocks that can move which i like because it's natural gas and
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will be moving frontline. and others because they move the freight. these things can move to 10% a day. they are enormous and to hedge them some way with s&p and try to take out the market risk. you are still exposed to the underlying risk. >> they are dying to know, are you in the capital city of the "hunger games" and what is the backdrop looking at? >> i'm in virginia beach. >> just checking. >> what are is the capital of the "hunger games"? >> for all "hunger games" people, it has that very psychedelic look to it. >> i'm in virginia beach at pat robertson studios. >> in terms of that, how far out is a trade and how far out do you see? the stock has been one that is difficult also to hold on to. >> it has been. as you take a look, it looks like it broke out on the upside
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after consolidatinconsolidating. you have to give it two or three years and right now we closed $15.62. you don't want to see a trade under 13 and where do i think it can go? 35 or 40? >> thanks for your time and good to see you. >> good to be seen. >> from the world renowned letter. in terms of ag? >> timmy seymore said john deer or deer and company had that one called and a nice day today. it seems to be having trouble around 83 or 83 1/2ish, you cannot knock that stock. in terms of the space i think it looks good. >> to $90, you have room to run on this. the chinese numbers for the big cap and the big state and the big names, this was a good number and people were confused as more time for the sme and a different part of the economy.
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if you look at what deer and cat and the other names have done on the back not only of that news, but this is a trade. it's a trade that has more renewal. >> the volatility came to multiyear highs. when will the fear come back. the play back. >> that's the exact point. the fear that i have is that there is not enough fear. you look at the decline and you have to worry about a couple of things. i believe that the perception in the market place is that the european crisis is resolved and china will have a soft landing. you have those two as well as rising gas prices and any of those things could upset the apple core here if there is a surprise in the fundamentals. i would be using the low volatility to hedge the portfolio and i would be wary that we have low volatility. it has to be concerned for the month of may.
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>> obviously you mentioned the same thing today that today we saw the vicks go up. people were using the volatility to buy in terms of the average investor. we had the issue so people are wondering you know what, use volatility, there other ways to use it. >> right. the etns and etfs that trade the vicks are horrible products. i would rather buy long puts because they are sensitive to changes in volatility unlike shorter options. that's how i traded. elongated options. >> the central bank rattled the markets. you have more on fast money up next. [ artis brown ] america is facing some tough challenges right now.
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is next hour on "mad money." big screen and big profits. i-max and the stock up nearly 20% after the exclusive with red hot ceo. that's coming up at 6:00 p.m. eastern.
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let's hit money in motion with the institutional bank. the bank of australia holds an important meeting tonight. they are looking at how it will affect the australian dollar in terms of the interest rate futures. >> the features are interesting because they are pricing in a 50-50 chance by the reserve bank tonight. that's good because it means the out come is not fully priced. the australian dollar is likely to have a reaction one way or the other. when the meeting policy is announced because as i mentioned, it's not fully priced. the bank will stay on hold and going to issue a very good statement given the majority of the data over the past month since the last meeting slowed on the whole. that will weigh on the dollar. i'm looking for it into the meeting against the new zealand dollar. >> how much of the dollar is trading on its own merits of the
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fundamentals of what the bank is doing and that of the broader economy and if you just had that first number of 53 which was an eight-month high, wouldn't we see the dollar rallying and shouldn't we buy the canadian dollar and other risks? >> the rba is in a rate-cutting cycle. they are likely going to cut ahead in may. it did rise overnight surprisingly and they did pop to the high, but came off the new york trading this morning as people feared it could take action. >> in terms of selli ining auss kiwi, what are the levels? >> i put a stop up at 127.60. >> thanks so much for the trade. money in motion every friday at 5:30 p.m. eastern time. next on fast, companies headquartered in kansas and kentucky. that means we're trading and
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>> in times square, the big game in the ncaa championship. tonight. sharp. we want to take a look at the company's headquartered in kansas or kentucky and go around the corn for topics and this is not a prediction of who will win the game and what the stocks are. >> they form the dixie highway and the place where you get emerging markets and jack daniels is ticking it down in mexico and the average level of the stock over the past five years is where the stock is trading and the upside is in the emerging markets in some of the most iconic brans in the country and let's make it clear. they are such a dominant league that people should recognize that now. >> coming from a big east guy. they have headquarters in kansas and you see where i'm going.
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i know firsthand. i bought one of the suckers from my bike. the whole thing. they have a tremendous growth rate there. go back and look at the quarter. they know jimmy cramer likes it. >> anthony. >> humana and i like humana. >> i think kansas is going to win. >> i like that, but kansas is not going to win. humana, i will go with anthony on that side. >> we have the person tomorrow when we come back. we always hear about jobs leaving america. here's a chance to create jobs in america. oil sands projects, like kearl, and the keystone pipeline
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will provide secure and reliable energy to the united states. over the coming years, projects like these could create more than half a million jobs in the us alone. from the canadian border, through the mid west, to the gulf coast. benefiting hundreds of thousands of families throughout the country. this is just what our economy needs right now. and i thought "i can't do this, it's just too hard." then there was a moment. when i decided to find a way to keep going. go for olympic gold and go to college too. [ male announcer ] every day we help students earn their bachelor's or master's degree for tomorrow's careers. this is your moment. let nothing stand in your way. devry university, proud to support the education of our u.s. olympic team. devry university, proud to support the education or creates another laptop bag or hires another employee, it's not just good for business,
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it's good for the entire community. at bank of america, we know the impact that local businesses have on communities. that's why we extended $6.4 billion in new credit to small businesses across the country last year. because the more we help them, the more we help make opportunity possible. how do you know which ones to follow? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
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how did the nba become the hottest league on the planet? by building on the cisco intelligent network they're able to serve up live video, and instant replays, creating fans from berlin to beijing. what can we help you build? nice shot kid. the nba around the world built by the only company that could. cisco. >> time for the final trade and we kick it off with the kansas alum. >> that brings a tear to my eye. kansas wins 85 to negative 3 in true super fan fashion. >> negative 3. >> along the spy. >> serner. >> anthony. aig is trading at 50%. >> and the ages, adm. >> i'm melissa lee. thanks so much for

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