tv Fast Money CNBC April 10, 2012 5:00pm-6:00pm EDT
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year to date in 2012. that will do it for us. see you tomorrow on closing bell and follow me on twitter and google plus. stay with us. fast money begins right now. take it away, melissa. i'm melissa lee and here are the top three trades. stock his the worst day of the year. should you add correction protection? is the best trade to stick with what's working? increases are big winners from google to starbucks and chipotle. we are talking to corporate analysts of where he is finding value in areas that outperform the market. this is fast money and let's get straight to the sell off. we had a close on top of a sloppy day. is this what we have been looking for? >> so far, so good. we talked about 1375 being the level. obviously we bounced from there
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and now we center have to talk about october. we talked about early in october, the opportunity of having an outside month to the upside off of september's action. we had it and the market rallied close to 200 s&p points. you have to look at the potential for an outside day and outside month with the s approximate p with 1359. 1340.03. >> we want to go back to tyler with breaking news on best buy. >> an interesting and surprising wrinkle in the resignation of brian dunn. the former ceo of best buy corporation. the "wall street journal" is reporting that the ceo resigned abruptly amid what the company described as a probe into his personal conduct. adding to the woes of the slumping consumer electronics retailer.
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a quote by the "wall street journal," certain issues were brought regarding mr. dunn. an audit committee was initiated and the company goes on to say prior to the completion of the investigation, mr. dunn chose to resign. they didn't disclose this probe earlier today when mr. dunn's resignation was initially announced. the company then failed to decline or declined to provide any additional details on the nature of the conduct in question for the events leading to the probe, including whether it was initiated by another employee or how long this investigation had been afoot. we reached out to best buy and will continue to do so and if we have more, we will get back to you. clearly at the least, a very interesting wrinkle in a day of news for best buy. >> tyler mathson, thank you for
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keeping us apprised on the situation. quickly, hindsight is sort of 20-20. they announced about a month or three weeks ago, massive restructuring plan and to have the ceo resign, that did seem puzzling. >> for did seem puzzling, but my initial reaction is things must be going terribly for him to resign. if it's something similar to the situation at hp, i don't think there is a bearing on the business itself. that would be a positive because it's unrelated to the operation as tyler said. >> the stock is trading higher and it did hit a 52-week low and get back to the markets here. we were mentioning as soon as we saw 1370, the selling started to accelerate. >> 1370 was resistant for a long time before we reached the levels. we got them a week or so ago.
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it made sense for 1370 to be to support. obviously the close was sloppy. i would submit that if we can manage to stay above this level, the bulls will still be in control. this month below 1340.03 will set us up for just as negative as october set us up as a positive. >> you as skeptical of the markets after the big run in the first quarter as guy is? >> i don't know that i am skeptical, but you wonder when you will see the pull backs. we look at the volatility index and when it got through the 50-day and now the 100 day, how about the last 30 minutes of the day? we were trading at 21 and 30 minutes left in the trading day and it pulled back despite the fact that we finished on the low. there is still an ap tide and with this volatility, there was a few folks out there willing to step in and sell some of this.
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>> when you think about it, they had two 10% up days in a row. that's the first time we have seen that action. it's interesting because we had them compressed at about 15. that's a very low level for a long period of time and a very contrary indicator. in a lot of ways, this was a pull back that was waiting to come, but if you were looking at other things, there was about 8% off the highs in may. the shanghai composite is 8% off the highs in march. stocks like deutsch bank are down 17% in a month. cat tracker down 14%. some of the things taking us down, things people thought were decoupling the u.s. economy and the market from emerging markets or that of western europe. it can't really go this way for that long. >> a lot of people talk about pannish and italian yields.
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anything you thought was disorderly or concerning or did it seem pretty much in line? >> it seemed orderly to me. i know that i am never going to hit the bottom. we did do some buying of stuff and bought a little bit of microsoft and they can summer go lower. one that i didn't buy more of is bank of america that we will get to more later. >> did you step in today at all? >> i didn't find as many opportunities, but i stepped in something a little bit because i stepped in too early. there a couple of out liars and financial. a couple of areas that did make you scratch your head. the earnings afterwards, maybe not everything in the material space is as awful as we perceive it might be. >> let's talk about the earnings. they did come in better than
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expected and we were scratching our head as the eps was 10 cents a share compared to a loss of 4 cents a share. the conference call is right now and the stock is trading higher in the aftermarket session. is this going to help? in the past it has not helped or hurt or whatever alcoa reported. >> i don't think they are a barometer for the broader market. it's hard to knock holes in the quarter. it was pretty good. specifically aerospace and they reaffirmed the demand that continued to grow by 7%. that's a global demand they talked about before. valuation-wise, it's cheap and has been, but you look in terms of where the stock is and at this lef, it's at the lower end of this four-year band we have been trading in. part the revision to higher demand for 2012 to 13 to 14%
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from 10 to 11%. we are seeing boeing interestingly in the after hours trade higher. close at 76. they are trading at the high end of 71 to 72. >> guy nailed it. in a way, here's a stock that was not performing. they topped at 14% off the highs. expectations were very low. to me, the set up here as we have been down four days in a row and getting into the meat next week. they had these moves and karen mentioned microsoft. expectations are coming down. it was up 26% on the year. one of the best quarters the stock had. >> what the ceo mentioned was china. all we hear on the network all day long is china looks like it's slowing down and we hear the various numbers. they talk about the global demand growth.
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coming off a 10% growth last year, that does tell us about the global economy that we haven't been hearing as much. maybe we are seeing the low end and up the names that have been decimated with the steal maker that are alternating. >> we want to take a check as well given the sell off. we are seeing them higher in the back of the earnings. we will see if this holds. alcoa certainly is helping here. let's get "options action"s. after five straight days of losses, now is a good time to think about the portfolio if you haven't already. >> it's interesting because a little over a week ago, we spoke about this issue and talked about the june 133 quarterly puts and suggested that people look at hedging for buying about
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260. if you are wondering what you can do, if you are thinking about getting out of the market orleaning on the short side, what you want to do is take advantage of what the market is giving you if you are feeling that and can still buy the puts, they are about $4, but to reduce the cost, take advantage of the skew that was introduced into the market. you are still spending the same $2.60 we spent a week ago to get protection about that 133 strike. you are only getting that 10% to the downside. i encourage that people should not run for the exits. >> we talked about these strategies and to me a lot of ways if you were to put that protection on, this is a great opportunity to get into the put spread. that is elevated and the one you own is up. you are making monodirection and
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you will sell something that is elevated too. i love the idea if you are late and you wanted to find protection, that is spreads right now. >> more "options action" every friday and follow the show on twitter to get constant updates. shares of google finishing with minor losses today because ubs increased citing new products and gaping momentum here. let's welcome the analyst at ubs on the fast line who made the call today. it's great to speak with you. >> great to speak with you as well. thank you very much. >> part of your analysis relies on channel checks where people are paying for advertising. how much should that help the bottom line? >> what we are finding is with a lot of the changes that google made on the site, more advertisers are pushed over to the side. that's a big positive that we are seeing from the channel check. we are hearing a big increase.
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these are google links with pictures attached to them on the right and left side. this is a key revenue driver as they get more clicks. we will see higher pricing and more clicks and not optimizing the site to paying for the site. >> let me ask you a question. i love google. one of the knocks is cost per click. talk about what you think the margin is going down, but the revenue is going up and how you think about that going forward. >> what's interesting is i think ppcs or cost per clak aclick ar a key driver. new businesses are not selling on a cpc on a go forward basis and build a bottom up model to determine the revenue. it will be a key factor, but overtime it will decrease. what we are seeing is you have
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to think about these other high growth businesses. with that said, what we saw last quarter, three reasons why they were impacted. one, quality changes as i mentioned before. the second was currency skpet third and the towards mobile query searches. more people with iphones and tablets searching. you are not monetizing the mobile as well as the desk top. that will continue to be a key drag. >> a grade deal of respect for you. they report on thursday. good for you. do we see $10 on that side for the earnings release and are you expecting a move way or the other? >> the street is looking for flat to maybe 1% sequential revenue growth. we upped our number to 3% and in terms of earnings, the estimates are 964. we bumped up to 1020.
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i feel comfortable with the numbers and anticipate that there is room for upside from here given what we have seen. the last time we saw a big jump was q2 last year. that was when google beat the numbers by 11%. >> what is consensus or investors missing. the street is very positive on the name. 35 buys and eight holes. they expect 19% earnings growth and 20% sales growth and the stock is down on the year where tech names that also trade at low team multiples have had monster years. there is a big disconnect between what investors think and what the street thinks. >> you are right. there macro issues that continue to bother investors. there is ftc investigations and concerns about the management team and the mmi acquisition and why this company will operate. we are not necessarily convinced they will do that. we think there is a chance they
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could spend that, but these are the things that weigh on the stocks. the biggest thing for most is just the cash. so many tech companies build up balance sheets and do not deliver it back. >> once they close, there is $30 something billion? >> that's a lot to me. >> over $100 a share in cash. like apple and hp and other big games, this is that sat on a rich balance sheet for sometime. >> great. thanks for your time. the price raise was up to 825. are you seeing anybody in the options markets reach out to that level? that's a 31% upside. >> they have been doing it in apple and google and activity where people are speak ulting. i have seen far more paper in both to the upside where people expect. that's the mobile display and the momentum you get from android. who is the loser as android hits
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>> welcome back. volatility is definitely back. the vickings index with a record setting eight straight sessions of gain. what does this mean? what's your interpretation? >> we talked about it briefly after we came off the period where volatility was compressed and traded below averages here. if you look at the chart, since
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testing 1200 and the s&p in mid-sdmid mid-december, they are gone to a new low. here we are now and we basically broke in the trend and closed above 20 and i leave it out there. are we going to be in a new regime and has it just been an easy money in the equity market and march up slowly or will we do what we have done over the last four months and come back in and have some order. >> the s&p 500. s in, he is. oppenheimer is here. a lot of people were saying 1370, that break was a key break today. what are the levels you are watching at this point? >> we have a bunch of charts, but i have to keep in mind the correction. the root correct imply that is something was incorrect.
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they have complacent and corrections are not bad, they are good. i have a couple of charts. this was taking a challenge ruler and drawing a line from the october plunge of 1074 and today we came right to it. that line is 1360. we closed basically at 1358. that is a very important reference point. that is not random and it stopped here at that juncture. another way to look at it, the second chart i have here. the all important smoothing mechanism and the average. this is not a static line, it is moving quickly. it will be around 1285 or 1290 in 2 1/2 weeks. if it is normal, the average correction is to four weeks, the worse case you can think about is 1285. that kind of thing. >> an attractive entry point for
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all of the viewer who is feel burned after the sell off? >> yeah. that would be like cover all your shorts kind of level and really get aggressive with the cash you have. in terms of the tops, that's important. when after breaking out, you fall back from the level to which you broke out. that's a reference point and today's level of let's say 1360 support starts here and goes to 1340. we are into a level where one might pull back. the worst case scenario at my work is 1285. >> we made the point in 1340 of 03 was the march low. not unlike the outside month. the upside in october. you put into stock in that or is it poppycock? >> the reference point, 1340 and change on the s&p and that would be where support sort of stops.
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meaning support starts at 1370 and goes down to 1340. in principal as a concept that, does not apply to a board or concrete floor, but we are at support and you can sink in and that's healthy and fine. >> i want to ask you about that today. that is bank of america. >> perfectly reasonable reaction. this is one of the great winners of the past many months. its move is epic. it was down to 492 and touches almost 12 and now we pulled back to about 850. we think you get at least a dollar or $1.50 and it should be fine. >> that has been a big debate and we asked you time and time again, but you saw volumes come down. one of the lowest today as well. a note said volumes are much, much lower than last year overall. that's the bottom line for
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consolidated. does it matter how much volume the lows or the technical levels are being made on? >> sure. they are very important. the most important data point with individual charts. in terms of aggregate, it is low, but you adjust for two things. the investors are not participating and leverage on the part of funs being reduced. the volume is not that unusually low. one other thing to keep in mind, the volume is heavy today and always heaviest on down days compared to up days. that is a function of when people buy, they buy reluctantly and they sell without regard for price. always heaviest on down there. >> always great to see you and thanks for coming by. carter worth of oppenheimer. the other thing to adjust for is stocks. if you take away the stocks in 2011 that would include the city
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reverse, the volume this year is about 10% higher because of the volume they have been in the market. that's another thing that is interesting. the options volume overall this year has been lower. >> off a little bit. let's not try to overanalyze. last year was a record year in the options world and we traded 18.1 million a day. we are down so far this year. we have seen a much less volatile market in the first three months. they did a great job of articulating and trading between 15 and 17 for sometime now. it's understandable why these volumes that were lower traded at 22 million to carter's point. volume on a down day. >> the note was first pointed out by our producer. >> it's must read. >> i knew you knew that. you have all their eight tracks.
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couple this with gold moving higher as well. you have to wonder that investors are seeking a sort of safety play. >> i am surprised that gold is not up more. the last time that treasuries were here and they are north of where it was. this was a significant move. i don't know if it's a flight to equality or slow down fears, but that's starting to be a big move. i thought the end of the bond rally at the 20 plus year bond rolly was here. there is still more. >> up by about 1%. are we at a period? >> that was an area coming into the halftime and while we were there, we watched all see activity in the goldminers as well as the gld. looking for this to continue to move at about 1230 and moving all of those to the upside.
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>> today's market sell off and worry that we are headed for serious correction. you are betting on art as a long-term correction. let's bring in the corporate activist. the huge concern is the aspect of liquidity. you say you can actually have both of those things. in the last few years, they changed their nature in the sense that there possibilities of both going to auction and going privately. in the series of derivatives, they are protected if you like or make it possible for you to sell without risk.
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>> how much do you think that could move the market and i don't think it's really that much. >> i think that most or many institutional investors are looking at class. they are trying to figure out how to do it in a save and fairly long-term basis. they are probably looking at ways to get liquid rather than staying liquid. #
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>> it's very unique and shouldn't be public. some of the guarantees that you talk about, i think it's -- they try to view them less because discreet doesn't like them. how do you -- it's the friction that people are afraid of. >> some of these don't do guarantees. they do them for third parties. the friction, you were talking about the commissions. they get roughly according to the price of the art get roughly between 10 and 20% and something from the seller some of the time. i don't think that's such great friction for the vehicle being traded. i think there is a marketing cost and a big real estate cost.
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i think there is a way to reduce that. i think that's reasonable. >> it sounds a lot to me and that's why i like that. >> i am curious because there is a lot of trader type of people in our audience who are honing in on your statement that there ways of hedging. can you walk us through? that's a new concept for a lot of people. this is a full market. it's not just buying a painting and putting it on the wall. >> not a full market yet. we will make a derivative designed to your portfolio if you would like to do that. more in the derivative market is the guarantee. the guarantee can function in many ways. it can function at an auction and over a year. it can function over a period of time where you are planning on selling things.
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it can function under the market and function at the market. so that in a sense, that's a derivative and we will write others. >> in terms of where the art right now is the most undervalued, is there an easy answer some. >> i think the art is most undervalued closest to wholesale. >> and the friction. >> you are a friction man? >> i don't know where the art is most undervalued. art is most overvalued in things that people see their friends have and the museums have. there probably 50 to 75 artists who have been what we call the art market. the rest moves along better than other markets. so that's probably where you focus. i think you try to focus and you can focus a few different ways and focus on the art market which was the highest risk.
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if you can figure out that you like and also that it's properly sponsored by the artist himself and the dealer, the curators and the museums and pick a point, you probably can make money in that market. i think in the short-term and that is possible and let them go when you go do it at retail. erasing games for 2012 and looking ahead to earnings after the kickoff. stay tuned. #
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unfortunately we have seen oil prices fairly high in the quarter and didn't see much traction in stocks. >> no and we talked about the opportunity to get out of the refiners and they had a nice run obviously earlier this year. i think te soro and valero traded up and we talked about pulling the rip cord. now is the opportunity to maybe start looking at these things. they might be sufficiently washed out. if you believe we put in a bottom in the s&p, they get bottomed very quickly. now is an opportunity and they are off the sellers. >> are you still in the integrated? >> i tend to want to stay in the names because of the fact. they have the spin off that is the some point adds to the value of this company and today on the halftime, dan dicker talked
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about valero and feels it's because of the run that guy was alluding to. it's too high and needs to be closer to 20. it's north of about 23. a little bit more of a pull back and you can look at the refining. >> should we be concerned at this point? we spoke to dan the other day and he said that gas prices would bounce higher meaning 2.50. that's not very high. that remains low. i would think that there would be a shift away and maybe volumes would be down on the rails. >> we talked about kansas city and the names. that stock had a tremendous run and pulled back for you. i think the all time high was 75 and seeing the trade at 69 now. greenbrier which was an interesting company and services the rail industry and appeared to be a good report. that stock got whacked. if you are looking for an opportunity, greenbrier is down
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about 8%. not to the extent you saw today, but if you want to play, that's where you look. >> let's take a look at alcoa continuing higher in the after hours session. better than expected. that is perhaps one of the dark spots in the report. saying the demand in europe as well as construction could see double-digit percent declines. that is in automotive and construction specifically in europe. that supplies a lot of these names and seeing the biggest increase when is it comes to earnings growth. does this tell us anything? it's about expecting as and versus expectations. >> that's a great question. they are baking a cake at these levels and all about visibilities and you talk about levels and where you want to get back in, i don't think you have
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to rush here. we will have a week or two to digest the early earnings and get a sense of how the market is reacting. alcoa like you said is up 6% and here's a stock that was down. the bank stocks, the best performing last quarter. in a lot of ways you want to wait and see what it looks like. >> session highs on alcoa. a mover. a check more time especially the day after the fixed rate. they have losses and we were seeing them trade higher and we will see if alcoa has an impact as it sits at the session highs. it is slightly higher by about a half percent at this hour. coming up, should you feed into the surroundings from the high flying restaurant stocks. which are right to roll on. much more fast straight ahead. #
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for 50 cents and seeing the huge pop for the glass container maker. i don't know if this is a monetary thing. >> if you look -- >> i think they guide it down. >> funny you should say that. the stock has gotten whack and my sense of what is happening, 35% better than the estimates they gave. i think we are getting squeeze and this place and our world and owens, illinoises of the world. even with the run up in the aftermarket, it might be worth actually chasing this one. that is something they don't say. >> look at the run up 9%. >> chipotle and young down 2% and starbucks down about one. they have all seen runs and making a case for what has been working in the case. the senior research analyst lifted her price target as well
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as estimates for all three stocks today. great to have you with us. >> thanks for having me. >> we want to focus starbucks, they announced the juice bar and the brewers and etc. what's next? >> the catalyst in terms of that is always the result. we are going to start to get quarterly results of all of these companies and we know upon that the launch they had recently was a very, very strong thing and that is what we are waiting to see. how well the core operating performance of the retail business is showing and what kind of increments can be expected out of the new launches. >> when we are looking at the three names, the con that sticks out is the one with the highest valuation, is that possible that could trade closer and above a 60 where the other names seem to be traiting at a little closer to a fair value.
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>> what i would say with a group like chi potly, you should be looking at the fort estimates. it will look quite high and it will be quite a bit more moderate because it's so robust. this is a company that we think earnings are 30% in the near term and a longer term can have a sustainable path of 20% plus earnings growth for the next years. that's why you are paying a high melt pull for that growth and the fact that the company can do it while throwing off a ton of cash. their restaurants are barely profitable. >> when you think about chipotle, it's primarily here in north america and starbucks, one of the reasons it's all time highs, how do you factor in potential growth overseas for a company like chipotle and
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starbucks in a market that appears to be trading at all time highs and it is expensive to start. >> yes. with respect to chipotle and the international growth, we don't put it in our model. the valuation we are giving chipotle is strictry based on what it can do domestically and same-store sales. this is really a call option on any international growth or the new shop house conduct that is in its infancy, but they are being seeded and down the line could be growth drivers. with respect to starbucks, it's an interesting company. it went through and this is the third phase. the first phase was a very high growth concept. the units are growing at 20% annually in the u.s. and outside.
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the stock traded easily 30 to 40 times. it clearly went through growing pains during the recession. the stock did fall back quite a bit we are back to starbucks. it's done that by operating very well in the domestic business, but really spreading growth pat forms out through the international business and now the consumer product. >> good to speak with you. coming up, it's turn around story that is a pure play on the good old usa. american apparel ceo doug chargy. send us your tweets because we are playing them after the break. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus - i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones. tdd# 1-800-345-2550 and i can trade wherever i want, tdd# 1-800-345-2550 whenever i want.
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>> fishing sales continue to lose money and jane wells spoke with the company's controversial ceo and joins us live from los angeles. jane? >> the losses are narrowing and sales are increasing and the ceo said they are back on track. we look at the first business interview and he said the company is going to prove you
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can make clothes here cheaper than bringing them over from china as wages increase and china has it make more goods for their own people. listen to what he had to say. >> for he asked me any day over the last 1,000 days whether we would go bank rupt, never. our business is too strong. >> we are talking about the labor itself. it costs about 55 cents to make this t-shirt. >> made in the usa can be and probably will become the least expensive option. >> how? >> because transportation costs will go up. the cost of doing business in china will go up. >> there is always another place. >> that's not really true, right? >> i don't know. seems to me there plenty of other places. >> bangladesh and so on, but effectually we would hope that worldwide wages will rise. >> the hedge fund has given a
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credit line and a ceo. he is trying to put behind him the sexual harassment lawsuits. he admits he's eccentric. listen. >> has it changed your management style? >> no. i think eccentric people are important. they think differently and they are out there with new inside. we need people that act differently. we will be in big trouble. i'm not a conformist. i'm a contrarian thinker and i'm proud of that. >> we're have extended cuts including him talking about why he thinks this model will succeed and answering the changes about his behavior. we talked about steve jobs and hugh hefner. back to you. >> fascinating interview and thanks for sbrin bringing us that story. we'll be right back. stay tuned. this at&t 4g network is fast.
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