tv Fast Money CNBC April 3, 2012 5:00pm-6:00pm EDT
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have a great night on twitter and google plus. stay with us because fast money begins right now. have a good night. >> ledge endary icahn joins us and what he expects to happen next. >> it's having more scares. how can you invest in google. he is putting his money where his mouth is. the best shades are shorting internet stocks. live from the nasdaq market site, you get to the after hours action and the number one maker, the stock is lowering forecasts to well below consensus and they are seen weaker than expected pricing as well as demand. the after showers session by about 6%.
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why do we care? it is also an official apple supplier. what we heard about apple and piper jaffray, a $1,000 price by 2014 and sandisk suffers here. >> it's not always that great of a thing to be. in a lot of ways, two quarters in a row they ever missing. don't gor get. they recorded that in january. they guided down and they are missing already lower guidance. this is a pretty difficult situation when you consider this stock was lagging up 18% year to date. something was saying there was a problem. the stock was only up about 1%. >> you liked this stock. what's wrong with it now? >> the capacity growth is decelerating last year in 2011 and grew around 75% and nowhere near there. sandisk highlights the troubles
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from space and weaker pricing and weaker demand. they are trying to diversify and get more into the ssd space. you have sandisk, the trade below 48. dan is accurate in pointing out the stock is nowhere they haven't owned in a while. you have the moving average at 45. that could potentially be a spot if you wanted to buy it and use the lowest point of reference. >> the key is weak demand. how many times do you hear about how great it will be? weak demand. you have seen it in fedex and vhi. the support is 47 spot 88. if that doesn't hold, you have to look for lower lows. >> the other side is these guys are not executing where they expected to. the guidance is down. stock is trading sideways and this has been dead money and a big rally went out and as he talked about, they have problems under their roof. the operating margin is where people have to get the stock more than the overall
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environment. >> one more thing. people are so focused on the apple system, but it has a lot to do with mobile devices. what did dell tell us in february. pc demand is weak. all these pc guys went from the net books at $250 upstream to the ultra books that have solid drives. it will be a difficult transition and have to get consumers used to paying more from notebooks. >> let's touch on the markets and what's happened. you are saying there was about 45 minutes of the day that you thought were interesting. that was surrounding the fom. >> it was. just real quick, micron technology you have to throw it in related to sandisk. that could be a problem. i would expect that to go down. folks are looking and keying off for the first time and i heard a lot of chatter about the adp report and i don't know if it is relevant and i think the markets
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are going to be busy on the fact that you are going to get a jobs report that is not tradeable on friday. the last couple of days, you had china and fomc minutes, in all three cases we tried to sell the market off and we haven't been able to. the only thing that stands out right now and the only trade is short of gold and that is what i did today. >> the gold trade and bernanke trade is a little perverse. good news could be good for the dollar and interest rates which was what was bad for the market today. you have to keep that in synch at the same time with everything else going on. probably a lot. i think dollar bullish and interest rates go up is bad and i agree with him on that. >> the brought interpretation is the twist might expire and that's that. he said they are still on the
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table. isn't it that he would say that? authorities a difference between the january and the february minutes. february left out the part that indicated that conditions might warrant such. what's going on is expectations were mismanaged and the markets need qe 3, but the expectation they would get more out of it. everything is being said, it's a bullish year on the growth story. everything what we are hearing is that there is strength out there. like the other guys at the desk, this is a dollar environment where you should be seeing growth and expansion for the dollar. the inverse dollar trades that they might have trouble here, i don't think it necessarily takes out the more cyclical trades. you are getting at least affirmation and the auto sales numbers. they have pent up demand and they can shoot these things down and they didn't come in as high as expected. the fed minutes were not a shock to equity markets even though it
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seemed like the expectations said we should have rallied higher. >> this is a chart that keith brought along and shows the dollar has been down. what do you draw from this? >> i agree on the minutes. you look back and you look back. guess what. 60 days ago when he said we will go to 2014 and interest rates and the u.s. dollar goes down and goes up. they could be more wild, but on a day like today, all you need to know is the u.s. dollar was up 80 basis points. >> boil it down to a way to trade this. how do you interpret that and say this mean that is what the correlation will continue or will break down at this point, what happens now? >> it's starting to trend. you have causality and january 25th and i think that was the
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big surprise. when things were getting better and had been, jobless claims were falling and consumption was strong. this guy said i will go to 2014 and take your savings accounts to 0%. you have seen a huge trade and you trade the dollar like this and the dollar goes up and everything goes down. until bernanke gets out of the way, that's the game you have to play. >> inflation is the other thing that tells the fed they don't need to do everything. >> deflation was as big of a concern. i don't think we will have those issues for a long time and i think the fed is right on that. this is where people again misunderstand. the real trade is that the long end is under pressure. long rates have to go higher. you will see this and no twisting out there to lean on the long end of the curve. joe said the payroll numbers are huge. the rates will ultimately get the fed and imply that the fed
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has more work to do and you are not getting that. >> let's move on to the top internet stocks. they plunge about 15% in the past two sessions after revising the fourth quarter results. they targeted the stock with other internet ipos. the research analyst for data explorers, great to have you with us. often times it is a short interest that tells the story and did we see the short sellers with groupon? >> absolutely. it was about 100% used up. how much you can actually borrow to short the name since the ipo. a high conviction that they had serious problems. >> the common question getting by a tweet with the groupon shares.
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the big sell off that is highly shorted, there is a concern about it. we will see a squeeze and long buying from the value investors and counting scandals and class action lawsuits. i may keep the value investors away from it. >> does it become now where facebook in essence when they ipo, they will see some weakness or softness related to these social ipos and they are not trading well. >> we kind of look at the average across internet ipos and it's about double. relative to the s&p 500. certainly groupon sort of sparked and may light the name for the weakness. people will be watching as facebook talks about the ipo. >> are you expecting and have the lock up situations with a ton of stock from insiders that come due.
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they try to manage it decently and had the same situation with hard to borrow and a tight float and the stock is higher than both the lock updates here. you have one coming here and what do you expect from groupon when you have this cloud? people are not talking scandal, but it's so close the ipo in the first quarter out of the gate, are you expecting this thing to get sloppy when the six-month lock up develops. >> it was extremely hard to borrow and it started to get easier and now sort of a better outlook for the sector and labor overall. we have seen it come down a lot. with group on, i would expect if more shares are available and traded, you will see it tick up more and take down the supply. >> the last question and we showed a screen saying pan dora and angie's are the most shorted stocks. is there a differentiation between recent ipo and internet stock as well.
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are they more shorted as opposed to the ones out of the gate for a while? >> absolutely. when you first come out, you have to prove your business model and prove you can have positive earnings and for some, groupon specifically, they haven't done that yet. angie's and zynga were down about 5%. they were highly shorted stocks. >> see you again soon. the data explores and want to get them curious. the matchup with the short interest is saying. it is increasingly difficult to borrow the stock and there ways that the people can short the stocks by buying puts and selling calls. we have seen the open interest and a lot of these names climb up. when you see that, it's in lock step with the things we are seeing with respect to short interest and we hit the business
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and sometimes it turns the options market to do that. >> this is that could be a big one. ripping through the dallas area this afternoon and tearing off roots and growning planes. >> under way northeast of dallas north of the 40 area that damaged in downtown 40 and on up and people in that area should take cover if you hear the sirens. we know of two significant tornados moving through the metroplex this afternoon, one of the arlington area and the damage heading up for dfw and they did not hit the terminal. american airlines is shutting down operations. a big mess and another one southeast of downtown. lancaster to hutchins is
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significant damage across the metroplex from about the center between ft. worth and dallas on to the east, still under way. >> thanks for the update. >> karl joins us to claim victory in a fight with cvr manager. up next. 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 will provide secure and reliable energy to the united states.
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what does karl do next. let's ask them and join us on the fast life. always a pleasure to speak with you. >> yes. >> a stunning result and i'm wondering if you are nervous that investors change their mind and they can't do anything until your slate is nominated and the poison pill goes away. more than a month. >> yeah, i real sort of think it's a bit reprehensible on the part of the company. the company, yes. they did all they could to shelter and tell them not to tender and i wasn't for real and that i would walk away. now we got -- when you think about it, 70% you think that the company would have the dignity to say okay. let's get this over with and
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quit. i lost many a battle and they say congratulations and well done and let's go to something else. it's annoying when you keep bringing back to the show and write today or yesterday and they cannot at this time purchase any shares. the only reason is they stay out of the way. >> they are in the press release and it reminds me of those who continue to fight on the pacific long afterworld war two ended. the war is over when the shareholders meet. i spoke to the representatives and they said they are out talking to shareholders now.
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they are trying to get them to change their mind. are you worried that they will change their mind? it's not in their interest to move the day of that meeting up. with time on their side, they may be able to persuade people to not tender the shares. >> they had months to try to persuade them. now it's over. so now they say we will try to persuade them. they are risking something. rebarron, the company has problems. i admit that. i say it. i use it for the show and meaning we will get the differences with the company. i agree with the company on this. they will sell it. we are paying a big premium.
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they are hoping that they will be changed. then they are risking $400 million of the shareholder's money what they are doing is saying if we delay, what happens if there is a tornado included? risking them money, my lawyers told me they might be liable after that. i think it's sort of despicable and at this point i lost many fights. you go in and i congratulated the guy. i really think the example of what's wrong with corporate america, i'm there and i got the 2.5 billion and i take the fact
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that they were saying i wasn't for real. we are here and we ought to shake hands and get it over with. >> let's say that whether the shareholder meeting happens as we are advocating or as the company has a plan, what do you do with the company when you are in control. do you really think you will be able to find a purchaser of this company? prar. >> i think it will be difficult. i said this before. the spread will narrow because of the fact that they are coming in. i have been successful. frankly, i will say it because both companies in this country barely run. you look at the sg&a of this company, it's equal to holly's and that's three times bigger.
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every company we have been in or look at, you can take 30% off. the companies that were in trouble and the casinos and the oil companies are making at the risk of being modest, making millions of dollars. >> let's say you come in and work your magic and do what you have done in the past for other companies. how much would this company be worth? what's the time frame on this? >> you never can put a time frame on this. >> i have been good and i look forward to buying it. i said i would buy it and there
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with the money, i would tell you this. we ought to get this overwith and stop wasting the money of the company that in a sense is my money. it annoys me that these guys can't just say okay, well done and congratulations. get this over with. you try for months and months and they didn't succeed. what are they going to do now? they are like the soldiers. you think something is going to happen. >> we hear you. you are annoyed. >> it's not an annoyance, but makes my point about corporate america. i won victories and shake the hands and say okay, here it is. congratulations. i'm more surprised about this. they tried their best and they said things that annoy the hell out of me and the fact that i wasn't for real, but they see i
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am and it's done. >> i want to switch gears because we are running out of time. the company owns about 10% stake or so and correct me if i'm wrong that that changed in the past couple of months. there have been reports in the past couple of weeks. >> they haven't changed in the past couple of years. >> you never know. there have been reports that they rejected a bit valued at $22 a share. the board rejected it a couple of weeks ago. can you confirm that and you know that was made and reflected and what do you think? >> obviously they don't call me up for it. >> it was a major shareholder, you know. >> why would i know? unless they call me. let me put it this way. if ever a company should be sold, it's this company. this sump should be sold and
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again it doesn't take advantage of the situation now. it can be sold necessary more than the $22. it has a great drug, but it doesn't have the ability or the basis, the financial strength to make the most of this. without the question they should be doing it and what's annoying with them is that they went out and knowing they had that bid, they swept it under the rug and didn't disclose it and they went out and sold 10% of the company and they had 22. they did have that bid. not only did they sell 10%, but gave themselves options. this is not the end of it obviously. we are the biggest stockholder
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and i'm not a shrinking violet. >> no, you are not. one last question, research in motion. is there any now that we are down to about $13 a share on that company, can you see value in this? >> you know, they kept -- guys that were short, i guess, kept looking at my name for the last months and i can hardly spell it. i will tell you that i have not been involved necessary months and months ago. they were saying it and i'm not involved now. it's a very difficult area right now. i will tell you as a freebie i'm not involved. >> as always. >> you guys like freebies. i'm not going to do another one. >> that's it and thanks for your time. >> okay. thank you.
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are he thinks am lynn is more than the bid out there. >> and he can't spell it. >> we should know about the programming note, but on "squauk box" you can catch another round of entries and lambert and david bonderman and many more. it's a big edition tomorrow night that gets under way at 6:00 a.m. eastern time. any others? i'm curious. now he said he is not and has never been in rim. >> why would they try to link his name? >> that would be the rumor. >> the u.s. have too many activists involved and the last couple of years, david einhorn in the last filing brought three million shares at some point i
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suspect the market cap is less than 7 billion to have 1.75 bill ron in cash and 25% of the market cap in cash and you will see activists involved. >> rim goes below 10 and cvi, there is no buyers. if he wants it, he will have to pay above 30 or 35 or 36. >> 64% of the share's tender goes to 30. >> coming up next, profiting from the commodity we can't live without. the trade on water. more fast, straight ahead. [ male announcer ] this is genco services --
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two of the most important are energy security and economic growth. north america actually has one of the largest oil reserves in the world. a large part of that is oil sands. this resource has the ability to create hundreds of thousands of jobs. at our kearl project in canada, we'll be able to produce these oil sands with the same emissions as many other oils and that's a huge breakthrough. that's good for our country's energy security and our economy. live at the market site in times square. time for fast money where
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long-term investing meets volatility. not oil and gold, but the water which is an investment with real concerns. they are solely dedicated to the high growth water tuchls. joining us now is the founder of xpv capital. a pleasure to speak with you. >> thank you for having me on. >> water is a recurring theme. how much money can you make and what are you returns so far? >> we are a private equity fund and we don't disclose our returns. all i can say is on average the company grew by 50%. >> you site a lot of things that are interesting and urbanization and infrastructure failure and population growth. this sounds like an emerging market to play. >> if all of those issues impact
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the emerging and the developing markets take infrastructure as an example in the developed world. post world war ii. they are failing and seeing that every day with pipes bursting everywhere. the emerging market there is not enough infrastructure in place and they are trying to catch up. those trends play into the world. >> who are the most advanced providers of some of that infrastructure and the public companies give us insight into whether it's ge or the big names that are heavy into infrastructure. i totally agree. this is an interesting trade especially for guys and the bigger part is not the conversion of contaminated water and the infrastructure side of it to me. who should we look at?
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they spun out of itt. they are the equipment suppliers that go into the infrastructure. getting the players that will benefit from this. >> is there any water play? when you talk about ge, you are talking about turbines and appliances and what is the stock that is the purest way to grab on to the trend. >> a couple of stocks would be of interest. you can look at zil um, a pure play right now. you can look at pent air with tyco's unit creating a large leader. of course probably one of the biggest players is the ecolab that merged. they are probably one of the largest players and cover a broad coverage of the market.
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>> how much does municipal austerity impact the space in terms of what is needed in the infrastructure. >> for will be a positive thing. what happened in the past is the infrastructure here in north america has been subsidized and suddenly now they have a lot of red on the balance sheets is forcing them to move to much more efficient infrastructure. a lot more advanced infrastructure that will be important for all of our societies. >> david, great to speak with you and thanks for your time. david henderson. this is an area that you have been in. which stuff do you like? >> the name said to take profits on it and the tickets are down in brazil and water treatment say stock that is run and the growth they are allowed to have. take a look at that. it gives you a lot of exposure and breaks that down.
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you can see how to play it yourself. >> did you see the stats about how many gallons of water it takes to go to various lengths. 713 to take one. it is staggering the stats behind the trade. >> water obviously is important. >> joe doesn't eat hamburgers. maybe like a soy burger or something. >> awk can continue to work. >> what happens to research in motion if apple goes to $1,000 a share. we have the prediction that got wall street buzzing. an analyst with a share that can make you profits. much more fast straight ahead. [ female announcer ] it's time for the annual shareholders meeting. ♪ there'll be the usual presentations on research. and development.
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company should be sold for more. he is thinking am lynn is worth more than that. >> the up great happened on the third and the down great on u.s. bank corp. i am curious in terms of the banks and what's your take on the sector. >> everybody owns them last year and they outperformed and they justified why they owned them. if the yield spread starts to expand and the yield guess up, the first thing you should have said to yourself if bernanke gets out of the way and interest rate guess up, you shouldn't say sell the banks. that's good for the banks and they make money between 10s and 2s. >> we will walk through the calls on both banks. it's good to see you in person.
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>> i'm sorry. >> i'm on the phone. >> yes, nice to see you. in terms of the walls, walk us through an actual pair trader. are you advocating buying and selling the other? >> we are characterizing more of a rotation. if people are market with the banks from an under weight position in the early to mid-part of last year, there is a fundamental basis for that. i'm not sure they are as strong as the overall market, but there is a basis for owning the bank stocks. some of these names start to get to levels that trade on a historical basis with a multiple of 11. they trade on a historical basis and people will rotate out of those into other banks as opposed to out of the sector. we looked around as the coverage list and they are trading at a discount on 12 and 13 earnings and on a book basis. that is a decent press. we seal rotations.
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not the natural short one on long and one on the other. >> what was your interpretation today and if there is no extension and is there a tightening of rates? >> i agree. we put a note out to the sales force when the banks tanked on the news that qe 3 was less likely. that's very positive. not as positive as short-term rates rising, but we will take them on a de facto basis. that would help the yields on the portfolio. what the banks need is the short-term and anything that is going to get rise off the floor is a benefit and not a detriment. it will be good to see them turn a corner and people understand that any type of environment where we don't have qe 3 and good for rates and also good for economic growth going forward. they can stand on their own and good for banks more strongly in other industries.
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>> i assume this is chris, aren't you? just making sure. >> the mortgage market, talk to me about the impact here and again, where you actually think we are here. we have seen tremendous move by the home builders. is this imputed in the price? >> i'm not an analyst and i think they have been more negative on the valuations given the recent rise in the mortgage. i think our viewer stabilized and maybe an up tick in certain segments or areas of the country. we don't believe we are off to the races and there is a very big difference between stabilization and a significant up turn. from a regional perspective, when you look at the valuation right now, i'm not sure i buy the banks because mortgage is improving. you buy and you talk about home prices. they are working well in certain banks in the first quarter. one, it looks like fixed income
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will be better than expected and maybe not as strong as it was first quarter last year and better than significantly. you are seeing a lot of refinancing and they are takinging the market share and mortgage underwriting and see good numbers in the first quarter and we think that will last to the second and third quarter as well. that will have the effect of what we are seeing for the banks. >> now that the fed is ready to take the training wheels off. we will help you make the next move. more fast straight ahead. 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.
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benefiting hundreds of thousands of families throughout the country. this is just what our economy needs right now. >> our next guest said fed minutes revealed more than you may realize. three factors that investors should be paying attention to. the center for financial ability and ran policy analysis and the treasury, great to have you with us. in terms of the three things that people should be aware of, what are they? >> going forward, what people will need to be aware of is the inflation trajectory. more statements by the fed
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because these were incredibly important and third the trajectory for the employment situation and we will have another read on that on friday. why were the minutes so unbelievable? >> the minutes showed us very clearly that the fed is beginning to contemplate a world without qe 3. the signal that the fed may not engage in qe 3 is an important signal for markets. they had a sympathetic reaction instantaneously and there was a reverberation in currency marks and even in commodity markets. what's happening with the fed and what happens with qe is vitally important for the trajectory of markets. >> what happens if the fed is wrong like they have been about
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2/3 of the time. the plan is generally late. you have an employment picture on a lag. what if they are wrong on that and they start raising rates then. >> i think the fed is being careful and has been throughout the cycle. they are looking to engage whether or not it's another round of quantitative easing. they are taking a little bit of a pause. that said, the fed is perfectly hedged. there is a clear statement that if the economy does turn down, they are prepared to do two things. they changed how they intervene in the treasury market and stand ready to increase the size of the balance sheet which to me is a cause for concern.
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when you look at the fed's intervention last year. the fed performed a whopping 61% of the net treasury issuance and the fed has been an active intervener in the treasury markets courtesy of operation swift. this is important for the pricing of the yield curve and the sympathetic reaction. >> a pleasure to be here. >> the latest concern for europe and spain and the debt level will rise to the highest points and slip on the spanish banks and got a trade on that. >> you are dealing with 23% unemployment and conjunction and if anybody is trying to make a bullish bet, it's risky.
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>> you talk about the fact that cvs has been rising and options have been static. you can take advantage of that by substituting calls for stock in the situation. if you, along the stock, you might want to sell it. if you are thinking of making a bullish bet and thinking it will bounce, i'm not sure why it would. risking 25 cents to make a bullish bet bet is a better way than to buy the stock. there catalysts on the horizon? >> you have to see the debt to gdp numbers getting worse and the onlydeeming part is it's holding ground. >> you wouldn't make it. >> it was a great trade for 10% and it's been a terrible trade for the last two weeks. >> more "options action" and follow the show on twitter at cnbc options to get constant trade updates women are trading
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>> want to trade yore tweets because we love getting it. keith, are you still short the russell 2000? >> yes. looking for 823. it's a good hedge against any small cap idea and a lot of good action in some of your longs obviously. you take that and you look at lower highs and a series of lower highs and a potential drawdown. iwm is the trade. >> bookie down joe asks would you agree to use it to apply oil instead of occidental or exxon-mobil. >> you can use exxon-mobil, but you can use anadarko and apc. it's in a great spot. the moving averages around 77 and the stocks around 79. they are past the worst instead of the litigation problems they had related to that.
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>> would you boogie down. >> it's spelled boogie down. take a look at this. this is unbelievable. the world's oldest gymnast. at age 86. she made history sunday when she performed in a german gymnastics competition and the tumbler is able to execute difficult trucks like the parallel bars. i can't do that now, so good for her. we'll be right back. the next revolution in music is happening here.
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pandora rocks the big board. 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
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