patty, kick us off. >> phillips. >> doc. >> microsoft. >> pete. >> nuance, i love it. >> grasso. >> sprint. >> that does it for us. watch "money in motion" tonight. and watch power. halftime is over "power lunch" and the second half of the trading day start right now. >> and what a second half it is likely to be. jamie and the whale. dimon may be no jonah, but the massive trade and loss is a story of biblical proportions. you'll hear mr. dimon's apology and we will explain how deep this crisis could go. shares of jpmorgan right now down about 8%, $37.49. one week down 10%. supporters of the volcker rule soundoff. barny frank saying without any help from the government jpmorgan has lost in this one set of transactions five times the amount they claimed

financial regulation is costing them. wall street now fires back at the volcker rights. sue herera has a big interview on that one coming up when we check in with her in just a moment and this just in, breaking news right now, the s.e.c. says it is opening an investigation into jpmorgan's whale of a bad trade. mary thompson kicks off our coverage of that $2 billion mistake. mary. >> well, tyler, calling the trading loss is an egregious mistake born of sloppiness and weak oversight, on a call last night, jpmorgan ceo jamie dimon saying losses came from a trade put on by its chief investment officer aimed at protecting the bank from a credit event. >> in hindsight, the new strategy was flawed, complex, poorly reviewed, poorly executed and poorly monitored. the portfolio has proven to be riskier, more volatile and effect economic hedge than we thought. >> the bank estimates the loss on the trade could increase by another $1 billion by year end.

losses the bank the size of jpmorgan can easily absorb. it still expects to earn around $4 billion this quarter. the real loss to the bank, a reputational one. dimon and his firm recognized for risk management through the financial crisis, though took the money was widely known as the only big bank not needing a government loan. last month dimon defending the cio's strategy following reports he called a tempist in a teapot about outsized derivative trades by bruno, nicknamed the whale. while dimon and others knew of the losses, the explanations given for the losses and trade strategy weren't considered reasonable at the time. then the losses accelerated and the firm decided to go public. ina drew reports directly to dimon. she and others unspecifieied involved with the trades remain at the firm. firing and claw backs a pay.

the question today as jpmorgan structures its once vaunted risk management, does the news energize big bank critics maintain new regulation doesn't do enough to limit or reveal risky trading activities many believe should not be engaged in by the nation's big banks. sue, back to you. >> mary, thank you very much. as you can imagine, everybody's talking about this. and here is what wall street is saying about it all. from fbr, we worry about the potential risk the credit derivatives portfolio poses to derivatives going forward. rbc says the prize fighter is knocked down but not out. the bigger issue is the hit to credibility. baird, near-term weakness creates long-term opportunity. the firm sticking with its outperform rating on jpm shares. and goldman sachs, losses and uncertainty, but story remains in tact. wells fargo, portfolio loss manageable but timing is unfortunate. kbw, though a black eye for management, it's a $2 billion

charge in a quarter in which we expect the company to still make nearly $4 billion. so how do you play this on a day when we see that stock down 8%? jim iuorio's been here all week. you told us earlier, jim, you were not e namerred with the financials. you were short a number of them. where do you stand right now specifically as it pertains to jpm? >> it's funny. realistically, banks in the political arena suffering awful backlash 24 hours ago. today has done absolutely nothing to help that at all. any thoughts of them perhaps circumventing the volcker rule have taken somewhat of a major hit today. you're right, i didn't like them and i was short goldman sachs. if you're short jpmorgan or short goldman sachs and you get this today, i think you're supposed to cover at least half that short. i still don't like the banks and i haven't done that yet. my finger's been on the button twice, but i haven't done it. look for a bounce jpmorgan up 40, goldman 106. back to you, ty. >> thank you very much, jim. lets bottom line this whole

thing for just a second here. try and cut through all of the weeds and make it a little clearer. jpmorgan's chief investment officer, the part of the firm that specializes in managing risk, lost $2 billion. some kind of risk management. now, the public face of this has become a trader reportedly named bruno ixil, sometimes known as the whale or the london whale and sometimes called vold medical report for his dark moving powers. he put on a set of trades tied to the value of corporate bonds. "the wall street journal" reporting the company's findings his group had $300 billion plus worth of investments as of december 31st. the chief investment office at jpmorgan, its job was to protect the firm from a downturn in the economy. and early this year it started to drop protection becoming more bullish on the economy. but then the economy softened a little bit, the market moved

against the whale. and the result, a $2 billion loss. and as mary thompson just said, $2 billion and counting. now, you've also heard a lot about the so-called volcker rule in connection with all of this. volcker rule is still being hashed out down in washington. scheduled to go into effect some time this summer. but it could be delayed and may be even more delayed now. the goal is to separate investment banking, private equity and hedge fund type trading called proprietary or prop trading from a company's consumer banking business. in other words, the volcker rule seeks to lessen the chance that a bank's quest for profits on behalf of its shareholders could endanger its clients, it depositors or ultimately the taxpayer. so what's unclear right now is whether the volcker rule would have prevented jpmorgan's trading loss had it been in effect? but what's not fuzzy at all is

that this episode has given volcker rule supporters fresh ammunition. john harwood just spoke with one of those supporters, senator carl of michigan. john is live in washington. john. >> tyler, senator levin said if in fact it's properly drafted by regulators due july 12th, it would have been prevented this trade which is clearly not the type of hedge the dod frank law envisions. he also said that he's concerned that regulators led by the federal reserve are wobbling under pressure from wall street including from jamie dimon of jpmorgan. he took aim at jamie dimon for seeking loopholes in that regulation. >> mr. dimon has argued that the activities which occur outside of the united states should not be subject to dodd frank or to the volcker rule. this is a london activity. but, boy, that's a huge loophole as well. so he's fighting for two or three loopholes in just this

little bit of language. and we hope that the regulators will not give him any of the ones he's fighting for because it would under mine the very purpose of dodd frank. >> now, senator levin, of course, wlo is a democrat in this democrat-led senate also criticized mitt romney, the republican nominee, for calling for the repeal of dodd frank. mitt romney put out a statement saying he supports common sense regulation of derivatives and that the jpmorgan loss underscores the need for that. carl levin said the dodd frank bill is the only law we have to protect against this and it's urgently needed because we can't bail out banks again. here's carl levin. >> we don't ever want to bail out banks again. we never should have to bail out banks again. but if they get away with this kind of bet, then we're going to be right back in the soup again. we're going to end up either facing economic disaster, a depression or having to bail out banks again. we don't want to be put in that position. >> so, sue, this is engaging all parts of the governmental system.

you're going to see a debate in washington on capitol hill among the regulators and also in the middle of this presidential campaign. >> oh, i'm sure we will, john, thank you very much. now, fresh off of those comments from senator levin, let's get the other side of this debate. robert albertson joins us, chief strategist at sandler o kneel. a lot of people think the volcker rule would have prevented this particular situation with jpmorgan. you disagree. >> the political spin has become uncanny. this is precisely something the volcker rule would not impact. they are hedging a securities portfolio for risk, approximately $400 million. the ability to do that is limited to some extent. they did it wrong. they know it. clearly nothing related to the volcker rule. the proprietary trading side has been shut down at virtually all the major banks. this makes no sense. this is an embarrassment for someone or a firm that has really avoided a lot of problems

in the past, yes. but if you put it in perspective, it's one tenth of 1% of assets. the stock is down 20 times the amount of the actual loss. assets held for sale is a normal banking function. and to the extent -- >> even with the size of the hedge that was put down? >> absolutely. the banking systems came close to $3 trillion of investment securities of all kinds, some of it is hard to hedge. you've got to do something about it. and if you fail or you make a mistake like this in transitioning it, that's very unfortunate. you pay for it. and you fix it. but this has nothing to do with regulation. >> okay. let's get another comment on that from eric snyderman, who is the new york state attorney general. your reaction, if i could, mr. attorney general, to what mr. albertson just said and also the situation with jpmorgan. >> well, i don't know the details about the specific trade. the question is was it really a hedge or was it something more like a trade seeking to take

advantage of a trend? the concern is not just really about the volcker rule, and i think sometimes we tend to over simplify. dodd frank provides a critical set of regulations related to things like the things senator levin was talking about. can you hide things in offshore accounts or offshore affiliates? and more importantly in a case like this, is this really a hedge? or is this something more akin to a simple bet? a momentum trade? i don't know what the facts are in this case, but i think the need for a comprehensive series of regulations enacted as was contemplated by dodd frank could not be more clear. the reason the american people have lost confidence in the markets and are not coming back to invest in anything at the rate we hope they would is because we don't have a sense there's one set of rules for everyone and they don't understand the rules. i think for mitt romney to say i'm against dodd frank and for common sense rules, until he puts out some common sense rules, i think he should be quiet about the need to reregulate the markets. >> what about the comment towards the individual investor?

i mean, if you're sitting at home, this is another example of how the banks do not know how to manage their own business. i'm not saying that that's what happened, but that may be the perception by the average investor. >> to echo the attorney general, we need more facts to really be more specific. everything that i've read and seen and analyzed tells me this is a hedge. and when banks do a hedge, it usually is a hedge. some are very complicated. and my view is dodd frank's motivations are all good. the idea that you can somehow protect these kinds of mistakes i think is wrong. and i think it creates false comfort. it also raises costs because it lowers liquidity in all financial markets. >> which drives the cost of credit. >> yeah. you have to look at this as a one-off event. >> i don't really -- i don't disagree with the notion that you can't protect people from mistakes. i don't think anyone is arguing you should protect people from mistakes. the problem is when you get a market that is so complicated

that ordinary investors aren't really playing by the same set of rules and don't understand what financial institutions are doing, you have to provide a system that restores their confidence, that there's some transparency and that there are cops on the beat who are watching if something is not what it appears to be. >> and may i add here, jamie dimon has shown in its complete naked ugliness. i think it's working. >> the s.e.c. is going to open an investigation. >> yes. >> to this, will you open an investigation? >> i can't comment. again, i don't comment on ongoing investigations even before i know the facts. i'm working closely with the s.e.c. and the working group president obama set up to look at problems created by the mortgage backed securities crisis. i have a lot of confidence in their ability to look into this. >> i know you don't comment on investigations, but given what you know of this particular situation, would those circumstances normally warrant an investigation?

>> i comment even less on situations where i don't have all the facts. i think that the key here is you're not out to protect people from mistakes, but you are out to protect people from the kinds of investments that shouldn't really be made. hedges that are not really hedges. we'll figure out what this is. the more important point is that this is what calls out to all -- you think that the american people have gotten over their sense of the markets are some kind of rigged casino where they don't want to invest because they don't know what's going on, this is the kind of thing that has to be aired out. maybe nothing wrong was done. give mr. dimon the benefit of the doubt. he fessed up. he said we made a mistake. they're allowed to make mistakes. you're not allowed to break the law. there are some regulations that need to be instated, some cases reinstated to ensure the security of the market so we don't get into the kind of drash we did in 2008. >> we will leave it there gentlemen. thank you very much. >> buying opportunity. >> buying opportunity on the stock? you'd buy today? >> all the financials. particularly money centers. >> you haven't changed your rating. >> no. >> all right.

you heard it here first. our coverage of the jpmorgan situation is just getting started. today at 2:00 p.m. eastern time, we'll talk live with eliot spitzer. we'll see what he has to say coming up, ty. >> sue, thank you very much. the other big story we are watching today, facebook. a week from today it is set to begin trading. julia boorstin in california where the road show stops this afternoon. but we begin right here in englewood cliffs with kayla tausche. she's got new information on the potential pricing. kayla. >> tyler, with the first half of the road show completed, we're hearing demand for the deal is already heavily oversubscribed just from institutional investors from big money managers and hedge funds. that's not taking into account the 10% to 20% of the deal, which is a standard amount, that will be divvied out to retail investors cht currently the price range is wide. $28 to $35. that will have to be updated. if the price range gets raised, which two sources said could very well happen even after more

data emerges on monday or tuesday based on demand, if that range goes up more than 20% above the current range, that would have to be disclosed in an s.e.c. filing. the pricing set to occur thursday with the trading friday on the nasdaq. as far as ipos, the demand is high because there aren't that many ipos out there. even small cap investors would take a pass, but there's just not enough sflie out there. tyler. >> kayla, thank you very much. now to julia boorstin in palo alto, this might be facebook's most important meeting, julia, outside of new york. >> that's absolutely right, tyler. mark zuckerberg is coming home. he's presenting to investors right in facebook's own backyard. we're not far from facebook's first headquarters. about 200 investors from around california are expected here today. that's about a third the number that attended the presentation in new york. now, the event is called for noon pacific, but it's not going to actually start until around 12:45 pacific when cfo will make

a couple quick remarks. then he'll be joined on stage by zuckerberg, ceo, and coo, sherl sandberg. they'll all be eating chicken curry. now, one thing that really distinguishes today's stop on the road show is the fact that a number of vcs will be in attendance. we're expecting to see representatives from graylock, axel and mer tech. all three invested in facebook and may want to invest more. security here is very tight. we hear zuckerberg is traveling with his own security detail. we actually expect the team to be coming around back and sneaking into the hotel far away from our cameras. tyler and sue, this is the last time before the stock starts trading that we expect all three members of the executive team, sandberg, zuckerberg and ebbe ebbersman to be making an appearance. we'll be watching very closely. back to you.

>> thank you very much. here on wall street, the stock market is up. a little bit. despite the problems of jpmorgan. also despite some not so great news out of china today. we'll go inside those numbers next and find out what it could mean for u.s. stocks moving forward. before the break, here's a look at today's top five winners on the trading session. they include monster worldwide and netflix, ty, up by 6%. for three hours a week, i'm a coach. but when i was diagnosed with prostate cancer... i needed a coach. our doctor was great, but with so many tough decisions i felt lost. unitedhealthcare offered us a specially trained rn who helped us weigh and understand all our options. for me cancer was as scary as a fastball is to some of these kids. but my coach had hit that pitch before. turning data into useful answers. we're 78,000 people looking out for 70 million americans. that's health in numbers. unitedhealthcare.

welcome back to "power lunch." brian shactman here at the markets desk. you know, sue herera mentioned monster worldwide right into the break. turns out the stock was halted. it just resumed trading again. it's up more than 15%. according to reuters it's attracted takeovers from parties like linkedin. it expects to send out potential information to potential buyers next week. of course in early march the company said it was open to exploring all options. the stock is on the move. seema has another one on the move at the nasdaq. jamming today. >> that's right. if you were watching "power lunch" yesterday, we told you arena pharmaceuticals was a stock to watch. advisory panel voted 18-to-4 in favor of arena's fat buster which could be the first obesity drug to hit the market in over ten years. the advisory panel highlighted some concerns around the drug's side effects including heart valve problems.

so what's next, the fda will likely make its decision by june 27th and vivus will hear back by july 17th. so clearly the race is on. analysts at jefferies putting their money on arena upgrading the stock from buy to sell this morning while maintaining under perform rating on vivus. the race is on. sue back to you. >> thank you, seema. still to come on "power lunch," big name retailers report earnings next week. we'll tell you how to play them today. but first, the fbi unveiling a new weapon in its fight against a multibillion dollar crime. and that weapon is you. ncer ]e a what if you had thermal night-vision goggles,

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the usually secret fbi is going public to help catch spies. espionage costs companies $13 billion in october. eamon javers in our investigations inc. team has been digging into this very large problem. eamon. >> hi, sue. you're right. the fbi's never done something exactly like this. this is a little out of the box thinking for them. what they're doing is putting up bus shelter advertisements and billboards in select cities across the country that have high concentrations of government contracting firms. it's all about economic espionage. the fbi's very concerned that foreign intelligence services are actually cracking into american companies and making off with billions of dollars of u.s. secrets, up to $13 billion just in their current case load

alone. now, yesterday i talked to the fbi's head of counterintelligence, and he told me what these spies are looking for. >> they're looking for everything from price lists to the latest pharmaceutical research, marketing strategies, new product information. typically whatever you view as your crown jewels at your company is likely the target of foreign economic espionage. >> but he also said there are certain things that you can watch out for as company management to make sure that you don't have any of these economic spies in your midst. take a listen. >> there are warning signs and indicators. they include everything from that employee who's working very late, but really doesn't have to. coming in on weekends, but really may not have to. trying to ask a lot of questions or access a portion of the company or some of the proprietary data that he really doesn't have a need to see. >> and, tyler, they're also

looking for a very particular psychological profile of the potential economic spy. the fbi telling me that includes somebody who's got a drug or alcohol problem. somebody going through a messy divorce. or somebody who's been passed over for a promotion at work. those are all the types of people that foreign intelligence services like to target so mine for information about the u.s. economy, tyler. >> eamon javers, thank you very much. to earnings now. and profit at nissan. it jumped on record sales. shares are today -- take a look there. they are up a little bit, about half a buck. over the past six months up about 20%. phil lebeau behind the wheel. what's new, phil? >> tyler, this is not only a case of strong earnings, but strong guidance coming from nissan. look at the numbers first of all. then we'll talk about the guidance. $951 million, that's what the company earned, more than double compare today a year ago. revenue up 15%. and record annual sales, global annual sales of $4.85 million.

it's the guidance that has a lot of people excited. they are raising the annual profit target to $5 billion from $3.6 billion. they expect global sales to grow 10% this year. and nissan's ceo, carlos gohsn says it's going to be a good year for the economy. shares of nissan up steadily more than up 2% today. one more thing to note, nissan will now be the largest asian automaker in china, india and russia, the three markets that are growing at a very fast pace. >> all right. phil, thank you very much. very interesting. we're going to stick with earnings now. jim iuorio's back with us as we look at the earnings docket for next week. there's quite a number of them, jim. you're going to tell us which ones you like and loathe here. monday we start with groupon. buy, sell, hold? >> groupon, i don't even really understand what's so great about their business model. at the end of the day they peddle coupons. they may post decent earnings,

that's fine. the market is bidding them up a little today. there's no reason i would get involved with groupon at this time. >> groupon, stay away. how about home depot? >> when you put that together with today's consumer confidence numbers, i kind of like home depot. and the way it's traded over the last week or so seem to put in a little stabilization area. if it rallies from there, it looks good to me. and your stop is pretty well defined if it takes out lows from last week. >> wednesday, nothing runs like a deere, there's limited brands, but let's focus on target. >> i kind of like target. i'm not too pleased with them hanging their hat on big growth in canada as their next growth area. i don't hear that mentioned as the next hot spot. or really in groceries. other than that i think target does a lot of things well. maybe take a small shot at target. >> some sort of discounters on thursday, walmart one of the biggest, obviously dollar tree, ross stores, gamestop, not in that category. what about walmart? >> the whole story is in walmart dialing down from walmart to dollar tree. i don't really love walmart. most all of their stores that

are international have been in countries for ten years or more. and they haven't had good return on assets there. not a big fan of walmart. >> it's been great staring at your back for the whole segment. sue, down to you. >> i'm going to have to come back and police you two. what a week for the gold market. the metal down more than 3.5% this week. gold prices are closing right now. let's see whether they can go out on a better note than they have been. sharon epperson is tracking the action at the nymex. hi, sharon. >> hi, sue. gold is actually closing at its lowest level of the year for a settlement price it appears. we did hit the lowest price 42012. we are closing here finishing out the week below 1600. we've been trading below this level for the last several days. it's been quite a week for gold. and you might think that it would be the safe haven play in light of everything that's happening in europe and here in the u.s. as well. but it's really the dollar that's been the flight to

safety. and gold has suffered as a result along with other riskier assets. silver has really taken on the chin down about 5%. and the gold/silver ratio, sue, a lot of traders pay attention to that, they say perhaps it's an opportunity to get into silver here. we'll see. >> all right. sharon, thank you very much. to china now where there are new worries about a hard landing after the economy shows unexpected signs of weakness. april data reflecting sharper drops in industrial production and investments plus, disappointing trade numbers to boot. so is this the slowdown in china that some have been talking about fearing? insight now from an advisor to fortune 500 private equity companies and hedge funds about profiting in china and also the author of a very interesting new book provocatively titled "the end of cheap china." welcome to "power lunch." >> great to see you, tyler. >> are these numbers that we've gotten in the past day or so the

signs that the slowdown in china may be deeper than originally expect snd and is that worrisome to you and should it be to us? >> i don't think so, tyler. the slowdown in large part has been engineered by the government. when we met in shanghai six months ago, inflation was a real concern. food prices were going up 15% to 20% last year. real estate prices were continuing to soar. so the government really cracked down. and they increased the reserve ratio rates tremendously, about six times in a nine-month period. so this slowdown has really been engineered by the government. but for the first time in about two years, tyler, i'm not very concerned about inflation anymore. it only came up at 3.4% last month. food prices were still a little too high at 7%, but the government has a lot of movement to be able to put on a little more stimulus. i expect in the next quarter you're going to see more bank loans going out. and you're going to see the government is going to reduce reserve ratios. >> so the government is getting the result that it sought through its policy as this

government changes over the course of the next few months in a time when you say it will become more conservative and move very cautiously. let's turn to your book. we talked about it when we visited in shanghai six months or so ago. your thesis here is that the chinese, who used to be the lowest cost provider of everything and most especially of labor, that that era is ending and that it has profound, profound implications, not just for the chinese economy, but for us here. explain it in a nutshell. >> absolutely. on the first bracket, tyler, you have salaries soaring in china. 21 of china's 31 provinces increased minimum wage by 22% last year. so companys that are relying on china as a cheap source of labor, they're going to get their margins squeezed. you've already seen meg whitman, the ceo of hewlett packard, saying she's probably going to have to raise prices to consumers. when you go shopping in target or walmart, get ready for higher

prices from china. good news for american companies, they can now sell into the country. apple has quadrupled sales from 3 billion to 12 billion. starbucks is now second largest in china now. the consumption story is here. investors need to be looking at companys that are selling to the chinese consumer. >> this is because those chinese now have more money to spend on all kinds of products, domestic and foreign like those from the u.s. the book is called "the end of cheap china." i highly recommend it. great to see you today. >> same to you, tyler. >> the shareholder spring, we got a hold of several big investors with big beeves against boards and ceos that rule corporate america. this is "power lunch," the home of the american investor. and don't forget, eliot spitzer is on the guest list today.

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welcome back to the markets desk. brian shactman here.

i am looking at for profit stocks. actually, these equities are what i first bonded with herb greenberg when he came to cnbc. we have career education, had terrible earnings but some of the things they said in the conference call alarming the entire sector. you see career education down 12.5, american public down more than 10%. i'll share quickly, they're talking about students making longer time to make their decisions. they're uncertain of taking on debt in an uncertain labor market. that's key because just about all these students in these schools have to take on loans to go. although stocks getting a hit. let's go to rick santelli at the bond market in chicago. cubs only one more win than my beloved red sox, so they both stink. >> i know. nothing to brag about there, but thank you for the sentiment. if we look at what's going on in the 10-year, boy, i'll tell you, i was wrong about equities i thought after jpmorgan's news yesterday, the equities might be under more pressure. but they've bounced back nicely. they are trending a bit lower. you can see by this two-day

chart of 10s, we're going nowhere quick. open the chart up year-to-date, you can see the only close that is lower going all the way back to february was this past wednesday and only by two basis points. and there's an hour and a half left. and beyond that more hours in the cash market. if we look at the next chart, this is the hyg. this is the high yield etf. prices, not spreads. i find it fascinating that it is still so well-loved. it's definitely up from where it closed last year. and the last chart, ten days in a row the dollar index is up. that is very important. and i'm impressed. but the level it's ascertained after that is still basically unchanged on the year. sue, back to you. >> thank you very much, rick. and we want to point out some interesting news at the bottom of our screen that basically the greek socialist leader has failed to form a new government. that makes it a little bit more likely, pushes us closer towards elections in the month of june. we're going to watch for market reaction because it's an interesting day to say the

least. and i kind of say that tongue-in-cheek because we have not so good news out of china, bob pisani. we have jpmorgan chase. we now have the news out of greece. spanish bond yields moving up once again. >> this is not good news on greece. there was a lot of hope that the socialist would align with the democratic left and the conservatives and sort of prevent the far left from having new elections where the far left might be able to win the elections this time. this is a little bit of a disappointment. we'll see how the markets react. >> why is the dow in particular proving to be so resilient? especially given the fact they were able to sleep on the jpmorgan news overnight. that stock itself is down about 8%. >> there are some days i get and some days i don't. i want you to put up the s&p futures. this is why you would not think it was a great start to the morning. there's no buying interest. look at futures. we opened on the lows of the morning. there was no buying interest pre-open. suddenly 9:30 and with just what you were saying, industrial

production from china weak, jpmorgan, spanish authorities want higher loan provisions, suddenly everybody woke up and said i want equities today. this is it. this is the day. but it doesn't make an awful lot of, from a fundamental point of view, a lot of sense to me. it's the conspiracy theory people going, explain it to us. >> we just want to point out the fact that the dow jones industrial average has now turned slightly negative on the trading session. you just got to wonder whether that is -- now it's back up again. >> that's a violent move from the open. when you start at the bottom of the day for futures and you violently move up to 120 points in the dow, 130 points, straight up line with the news that you have, it makes people wonder, gee, bob, are we oversold? was it ppi that came out at 9:55 or so? i don't think so. >> i think the latest move to the downside might be greece. that could be what that is. >> yeah. >> thank you. coming up next, jpmorgan's $2 billion bad bets.

chesapeake energy ceo loan debacle. yahoo! not bothering to ask its new ceo for a resume, it's all fu to the fire for what we call the shareholder spring. when we come back, two major shareholders soundoff. "power lunch" back in two. who have used androgel 1%, there's big news. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child,

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♪ i can go anywhere ♪ i can go anywhere today ♪ la la la la la la la [ male announcer ] dow solutions help millions of people by helping to make gluten free bread that doesn't taste gluten free. together, the elements of science and the human element can solve anything. solutionism. the new optimism. coming up on "street signs" at 2:00 p.m. eastern, we ask, could jpmorgan's $2 billion trading disaster actually be good in the long run? the former sheriff of wall street, eliot spitzer, is our guest. will this lead to less risk and a more even playing field for the little guy?

we'll also tackle machines and whether high frequency trading needs to be seriously slowed down to make it safer and more fair for your money. it's now back to sue and tyler on "power lunch." >> all right, mandy, thank you very much. several major companies in trouble with shareholders this week. increasingly active shareholders. jpmorgan, bank of america, yahoo! to name a few. we're talking with two now big shareholders to see what kind of feedback they get from corporate america these days when they press their cases. michael garland is responsible for shareholder activism for new york city's pension fund. and a 1.7 million members and $850 million in pension assets. hope i have those numbers right, lisa. let me begin with you, however, because you have your group.

is this trading loss confirmation to you as to why that must happen? >> yeah, tyler. you know, wall street's already driven our economy into the ditch once. i used to work on wall street. it doesn't need to be treated like a casino. we think it's time that shareholders stood up for themselves and take the fight from the streets into the boardroom. that's what we're doing. >> michael, when you press your case at a company like bank of america or chesapeake or jpmorgan -- any of them, what kind of response do you typically get? do you get a response? >> those companies where we get a response, you know, it's a little less public. it's instances like bank of america or chesapeake, say a really good example, of a company that has been unresponsive. and we've been engaging with chesapeake for the past 18 months around issues about ceo pay, board independence and related party transactions. the past several weeks those are exactly the issues that have come to the floor and destroyed a substantial amount of

shareholder value. >> has anything changed, michael, at boards over the past five years? in other words, do you believe that boards are effectively still poodles to the ceos who basically have selected them? >> i think incrementally market wide there's been improvement. but there continue to be cases like chesapeake where you really have a ceo that certainly looks like he's picked his board. it's a captive board and they have repeatedly failed to exercise independent oversight. >> lisa, how about you? are boards working for shareholders? or are they working for management? what's your view, basically? >> very often it does seem boards are forgetting that it's shareholders, many of whom are workers and the retirement security of workers is tied up in the assets and shares of these companies. so we really need the board members to step up. now, there are a rising percentage of companies that are adopting the policy of having an independent board chairman to

oversee management so that jamie dimon, for example, is in -- wouldn't be his own boss. but we really need a lot more progress on that. >> lisa, i should have asked, when you have pressed this initiative to separate the chairman's office from the ceo's office at jpmorgan, have you gotten any response from them? >> we haven't gotten any response from jpmorgan. and on the other hand, goldman sachs was quite responsive and did institute some changes. so i think it shows you that the executives, and they're always men, who are joint chair and ceos. they don't see any reason to give up the range of power and having all the control of a company unless they're under attack. >> b of a been responsive to you? you were at their annual meeting earlier this week -- i don't know whether you personally were, but your representatives were. >> right. we were at b of a. b of a did have to separate those roles a few years ago. and there was a ceo departure.

but at b of a, we're trying to advocate companies like b of a, not spending so much shareholder resources on lobbying to reduce legislation. so they don't have to be bailed out again. >> michael, back to you on walmart. you've got a proposal that would call for the ouster of five directors at walmart, their upcoming meeting just weeks away. what do you expect to happen? have they been responsive? >> they haven't been responsive. our office has a history going back to 2005 and 2006 engaging walmart asking for an independent review of their legal and regulatory compliance three times between may of '05 and may of '06 in letters the investors engaged with the audit committee in september of '05 exactly when the letter appeared from mexico. there was a meeting with two including one standing for

election this year. there were clearly failures of oversight. and we know the current and former ceo were aware of the allegations and failed to pursue an independent investigation and acted in conflict with the interests of shareholders. tyler, i wanted to talk about -- >> quickly. >> you asked the question about responsiveness. the steps we're taking at chesapeake and other company neighbors deals with this history of unresponsive boards. we have a proxy that would allow substantial long-term share owners to include a limited number of director nominees in the company's proxy statement. until we get truly independent directors who come from investors and not through the board's own process, we will continue to have problems with the genuine independence of boards. >> michael, thank you very much. lisa, thank you. we'll be watching most especially perhaps the jpmorgan case and that walmart meeting, which is june 1st. sue. >> ty, well, jpmorgan's $2 billion blunder cost jamie dimon

ceo his rock star status? more "power lunch" in two minutes time.

the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us.

welcome back to "power lunch." brian shactman here at the

markets desk. look at dva, deals with kidney dialysis. there's an article in the "new york times" that says how the government pays for dialysis drugs has thrown the industry really on its ears and no one knows how to deal with it because patterns have changed. not good for the stock. down 2% at the lows of the day. back to you, sue. >> all right. let's get to the power rundown where we're breaking down today's top story on jpmorgan's $2 billion loss. joining me here at the nyse, neil wineberg, editor and chief of american banker. and our bob pisani. gentlemen, welcome. first of all, we're going to start with whether or not the banks will ever learn. neil, what do you think? >> i don't think they'll ever learn because they don't see it in their interest to learn. obviously the banks think this is profitable depending on point of view, proprietary trading, speculating or hedging. certainly the fact they moved this over to london and the fact it's been continuing would indicate jpmorgan doesn't want to learn anything from this. >> should banks be allowed to hedge, neil? obviously they felt this guy was making money for them. they felt the need he had large positions they felt the need to

hedge, which is a prudent thing for a bank to do. you can argue they shouldn't hedge, or banks shouldn't be allowed to be doing this kind of activity, i don't see how you can argue they shouldn't hedge. they just made a bad bet here. >> that seems to be the big question. was it hedge? was it speculation? the argument i would make, bob, is who can say in some cases? this is what makes a volcker rule absurd to define what's a hedge and what's not. i think that's where regulators are really creating a mess. >> if i'm the individual sitting at home, bob, isn't this just another reason for me to invest in a mutual fund? if the banks can't control their own -- >> i'm sorry, this is not good news. little things like this do matter. the flash crash ultimately was not bad in terms of points, but it was bad in terms of morale. to the extent this gets to the average investor, they're not going to understand it, they took too much outside bets -- >> they're going to hear $2 billion dollars. >> that's not a loss, necessarily. but that's the number that will be thrown around. >> neil, do you agree or no? >> i would say certainly. it's a confidence crusher. but at the same time these banks have been doing this type of

activity as bob rightly points out sometimes to hedge, sometimes to speculate. they've been doing it for a long time. that's why the banks that tend to do more of this tend to trade at a lower multiple, because people know that this is murky, it's dangerous, things can blow up. >> jamie dimon, kind of a rock star status in the banking world. he certainly took command of the situation on the call. does it tarnish his image? or was he able to turn it? >> it clearly tarnishes his image, but this is a very well run bank overall. i think investors will cut him a bit of a break. interestingly we did a poll last week and people were not supportive of his arguments a week ago that actually the real problem and only problem is over regulation. >> his image is tarnished, but six months from now in the third or fourth quarter he can deliver outstanding earnings, it will be other. this trade is not unwound. they don't announce this. everybody who knows is going to shoot against him. this is a major problem. >> that's right. it's going to be very difficult to unwind those positions.

that's the next layer of the story. which i'm sure we'll talk about with former wall street corruption giant eliot spitzer. 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.

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at legalzoom.com, we put the law on your side. wow. if it weren't for jpmorgan, those dow industrials would be