something to keep in mind when the tweets are positive, we're not attributing to why, just saying what happened. "closing bell" up next. good afternoon, everybody, welcome to "closing bell." we're entering the final stretch and averages are bouncing back. >> yeah, i'm in for bill grit fet, financials in among the groups leading back to session highs. speaking of banks, thank you so much, talk about surprising comments from sandy whyle. >> he caught so many people off guard today when he made comments on cnbc that he was in

favor of breaking up the bangs, he said we should. we'll talk to meredith whitney and paul ryan later in the program. >> first, here is where we stand right now. we have another drtriple digit move, but it's not to the downside. opportunity numbers from boeing, caterpillar. it's a modest move of only two points and the s&p 500 is ahead by almost four. >> we could have expected this kind of a rally today because the federal reserve telegraphed what it's going to do late yesterday. and the wall street journal reporting they may have stimulus next week. it was strong earnings from old companies like caterpillar and bowing. >> absolute sli, let's break it

down now. we have michael of pension partners, brian shactman, rick santelli and paul christopher as well. it's good to have all of you with us. michael, i'll begin with you. this jumps out, you say fear is back and bullish. you're talking about a contra t view. >> yes, as long as fear is here there will be the potential for further global monetary action. it happened in november. that is still very much in play. that's why you're not seeing equities collapse when it looks like the end of the world. >> do you expect we will see new stiplus from the feder-- stimuls next week. >> it will happen because yields are so low so it either has to

happen or it will be forced to happen. >> shactman you've been on the floor today, how are traders reading what we're seeing today. >> some reflect what michael just said. also you have three 100 point down days in a row. you have a lack of macro, euro, asia headlines here, and it becomes a stock driven market. apple is down, but the four best performers are tech names and you have selective gains. so in the absence of any macro headlines today, inside the wall street journal report yesterday, people are just picking stocks. >> yes, certainly one of the points we make. rick, let's talk bonds and what happened after that auction. do you think the banks license

is probably. that's certainly the talk on the street. once dwen we had another record low yield at the auction. the auction was rather messy, i gave it a d plus. it did not change the fact that the yield was a record loi. yesterday we closed at 54 basis points, we're at 55 right now. it does under score a couple different dynamics. the fixed income markets have been steady. the slow economic growth pry continues. stocks are up, i understand that, and the story basically being out there right before the market closed, draw your own conclusions to that, the fed believes that a higher equity price, what they're paying attention to, think where the stock market was yesterday at this time, is synonymous with the economy. so if they do another quantitative easing program, and

the markets don't respond in a way that we think it will -- i wonder how that will change the dynamic. there's people that don't believe what they're doing to stimulus at all. an investment management group out of texas. i urge people to go to the website and read three independent research papers that don't define what the fed is doing and some of this money throw into banks as a stimulus. >> paul, what's your read as you watch thetivity on the street. >> the markets remain very sensitive to the possibility and prospect that we might have more policy action from the central banks. we agree that coordinated action is a possibility. i also agree that that's not really going to be any kind of a solution. also we have some people talking about the potential of getting a banks license. that has as some positive impact

on the markets today. a lot of folks in europe agree with that. >> all right, gentleman, thank you so much. you know the headline he was just mentioning out of europe, come across it about 3:00 in the morning. that pry has more to do that what we're seeing today, the market has been following every move. >> i also think it's partly because the fed telegraphed what they're going to do. and to say a day as early as next week. and they're making a point to say it could be next week or in september. a big impact on the gold market today. it's up, and it may be ready to act sooner than later. 55 or 54 minutes left until the

closing bell rings on this day. the nasdaq is higher by one point. >> we have a big show ahead, don't miss a minute of what we have right now on the "closing bell." >> sandy whyle making a major u-turn. >> i think we should go and split up investment banking. >> will it increase shareholder value and eliminate too big to female institutions. meredith whitney weighs in next. and do you green with weill's call to break up the banks? and the fed may be on the verge for of economic stimulus. will that do more harm than good? paul ryan joins us in an exclusive interview. it's all ahead on "closing bell." [ male announcer ] when this hotel added aflac

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welcome back, sandy weill calling for a break up of major banks. we look at this big u-turn. >> he was the ultimate empire builder. his seminole merger he called "one held of a candy store." his strategy was bigger is better. i think the model works and i think es specially right now these are very good times in the economy. if you want to think about it, there will be a problem that

arises sometime in the future, and i want to be with a company with a strong capital base. months after that interview, the storms set in and the mega banks were left with their nets tangled. he told the "new york times" that year "i felt like we could weather the storm." and saying maybe the super market is not the best model. and now phil parcell says banks should be split. it's clear that values would be higher if you split them up. ironically the primary reason to buy big financial stocks today is the hope they will be broken up. the tide appears to be turning for these banks. let's take a closer look of it, is the break up of big banks the answer.

let's have meredith whitney join us, great to see you, thank you for joining us, is sandy weill right? should investment banking will split? >> i think it's steadily in the process of being split, but you don't need to break up the banks. it's clear where the profit sblt coming from and that the banks are at the initial stages of getting to where they need to go. i would say very early in the first inning of this phase. one of the first things they did for the banks was destroy pricing. so pricing on every product from mortgage to home equity loan to a credit card was eviscerated with the idea that they could make money on the other side. the fact is the aggregate has

destroyed the pricing model for financial services. that has to be reestablished. and what investors and the market is saying is the regionals are worth more than the heavily complexed models because it will take years to downsize the institutions. a lot of the most profitable. >> that's where they're making for profiteprofits? >> yes, if you look at the cash management that global transaction services of citi and jpmorgan, they're great businesses but they're small businesses, under 15% of the total businesses, the asset management business is great, these are annuity high capital low fee businesses, but they put all of the eggs into the basket of capital markets so they can

originate consumer loans and out on the other side. that model is broken but that's where the bulk of the infrastructure is. it's nice to say the big banks should be broken up. it's very expensive to do so. that's why you see the big banks trading at such deep discounts. >> when you just look at the deposit part of the business, does that business if split away become a utility? everybody is worried that these banks become utility, harder to make money and to really get that premium that you're getting in some of the capital market type businesses? does the premium go away from the deposit business? >> there is no premium right know. what the big banks have done and what they're not at all supposed to do is use an advantageous lending pricing vehicle to under price other products, leading with their balance sheet, effectively, and garner capital

markets because of it. that's not what is supposed to be done, that's what has been done, and excess leverage has resulted from it. taking an annuity type business you can make great money in a utility type of business by borrowing cheaply and lending sensibly. so it has, is, and will be attractive, you're combining everything, under cutting in one place, trying to make up for business in other places. it's not a business that works. you should always be in profit making businesses. what they accused my own business of being is the research model -- that's why i went on my own. it doesn't make any sense, you're either making money or you're not, if you're not, get out of the business. >> good point, etc. ask about the banks right now. you downgraded the stock. do you have any buys right now?

or are you a seller? >> i'm not a strong buyer of the banks here, some are more attractive than others, but i think the group has no momentum here. the dividends are marginally attractive. and there is a lot of complexity risk that is still baked into the system. one thing that happened this last quarter was the put back the banks beat lowered expectations on the bottom line, but almost all of them missed -- there's not a lot of gas in the tank. most importantly, you have got to completely reconstruct these banks, and they have to get back to basics and profitability, then you will see momentum. it's not like when the banking sector collapsed you had a point where it was just easy money.

the business model had to reconstruct itself similar to the early 2000s when the business model had to reconstruct itself? >> how long does it take to reconstruct? is this dead money for a year? >> i think it's management dependent. you either face the facts that the model has changed and you shrink the business -- one of the issues for some of the big banks still hanging on to excessive capital, they always have the option to shrink they're book. one that surprised everybody was bank of america. he is shrinking the business, and it's not sexy, but it's what they need. >> it's cheaper, but i don't

know if i would buy it. >> thank you all pretty cheap. they have downsizing to do as well. >> let me ask you about the headline risk. we talked about the rate rigging scandal, you said this is going to get bigger, what other banks are vulnerable? >> i think the banks with the big exposure to a jp, a city, will be more vulnerable. it's not a great time to be a bank because everybody is going against the banks, but in terms of libor specific, the more complex, advanced model active in that derivatives market will be more exposed. >> everybody is pointing fingers, where are the regulators in all of this, the new york federal reserve releasing documents, and we know that geithner said he saw a problem here, but perhaps not

enough, does that become bigger -- >> don't you see that the regulators always win here. regardless of who is to blame, the regulators always win, right? they have more protection. the banks are in a position of weakness. if they're right or wrong, the regulators always prove themselves right. >> so how do you invest in this environment? yesterday we heard they're going to be there providing more stimulus possibly as early as next week. apple was a miss last night, some of the revenues has been light, are there groups you would be buyer here? how do y want to be positioned into the end of the sumpl? do you think a sell off this summer or no? >> you clearly see the consumer weakening in overall spending and decelerating. the market and the economy is weakening clearly. what investors are doing are paying a big premium for quality and they're paying -- they're

demanding a big discount for any kind of risk and volatility. i think that continues to the end of the year. you have a name like a wells trading at 2 x on a multiple bay suggestion, any of these banks we discussed, and some of the regionals trading. i think you will see some of the rich premium continue and some of the discount continue. >> are you expecting fu vulnerability or no? >> nothing in europe shocks me. the banks had to with tasered. this is an effective wind down in the banks. the equities by the european banks aren't worth that much and it takes a long time. even if they have a plan, it takes a sixth month implementation plan. you knew it would billion a big

drive on global gdp. i think now we're looking at political systemic shock. >> some of this is priced into the market you're saying? good to have you on the program. meredith whitney joins us here. do you agree with sandy weill's call to break up the banks? tomorrow, barney frank will be with me weighing in on the potentially hot news of breaking up the big banks. we have paul ryan on deck today, is a short break and then more market coverage. up 56 points right now with 30 minutes until the closing bell sounds. >> new regulations mean nothing and regulators are not enforcing existing rules on the book. we need regulators doing their

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in washington today more missing the warning lines of the collapse of perbrine. frank lucas put the blame squarely on enforcement. >> there are some in this town that argue that we need more regulations, but new regulations mean nothing when the old ones are not being enforced. with us exclusively right now, dan roth of the national futures association, and scott cohn, tough criticism there, how do you respond? >> what we told him and other members of the committee today is that we clearly have to do a better job of using technology

to monitor firms compliance. we uncovered this fraud because we moved to an electronic confirmation process. the next step is to move that electronic confirmation process to a daily event so on a daily basis they're getting confirmations from all of the places they're held -- >> but sir, you uncovered it too late. at this point, investors have grown tired of the incompetence from regulators where it's mf global or something else, there is a decided lack of trust from the individual and smaller investor in this market because of people like you and others just not doing their jobs.

no accountability. >> actually, i don't disagree that this fraud took too long to uncover, and clearly there was a sea of forged documents here that defeated the standard audit practices we're using. >> but mr. roth, it's those audit practices in question. there's so much here ma makes people scratch their heads. up until a couple weeks ago, the nfa was uncovering balances buy using postoffice boxes. the process has been a mess, and only right now, according to the testimony, you're going out and you're going to survey the firms about their bank balances, i assume investors thought that would be going on all along. >> number one, our average experience in our compliance department is over six years.

number two, the bank confirmation process, the address that we sent them to here was a po box. most of them use a po box because it helps them control the flow of mail. >> what went wrong then -- >> contacting the bank directly, sir -- >> go ahead. >> i'm sorry. granted a lot of financial institutions use po boxes, but at some point over the line they didn't contact the bank directly independently? >> we did, we thought we were mailing confirmations to the bank every single year. we did not do verbal confirmations of the written confer nations that we received, that's not a standard auditing practice at all. i think a way to cure that deficiency is just what i

outlined. >> what went wrong at peregrine. he said he defrauded them for 20 years on your watch, how is that? >> he had a complete set of forged documents. it was a pervasive set of forged documents. >> let me ask you, are you buying the assertion. >> go ahead, scott, the satellite delay is in the way, please continue. >> are you buying the assertion in the suicide note that he acted alone? i know it's early, but do you believe he did this on his own? >> all i can tell you about that is the sheer volume of forged documents produced as part of this scheme is staggering and had to occur on a daily basis.

i think there is a legitimate cause for question. >> let's try to talk about the solutions to all of this, i'm not sure what your background is and experience in business, but some people say the regulators themselves lack the necessary experience to find these frauds while they're taking police station. tom as our own people on cnbc have mentioned, maybe people in the business themselves should be regulators so they can get in there and know what to look for, can you respond to that. >> i think it's a number of different things. we do tap into that resource. >> for the experience or lack there of, if you will, address that, please. >> the experience level, on average, over six years, there is a manager on every audit

which is an average of ten years. there is a supervisor that averaging eight years. we need to other other people and we do on or risk committee, to help analyze data. >> what else do you need to do to ensure you don't miss 20 years of fraud again. >> as i described, we have to make the confirmation process not only fully electronic, but a daily event so all of the deposit depositories on a daily basis and make sure the numbers are in accordance. >> thank you, shirr, our viewers wirk you luck.

we'll have more coverage all day thursday and friday. the collapse came only nine months after the demise of mf global. pretty extraordinary. >> that was an enlightening interview to say the least. >> we have less than 30 minutes to go before the bell rings, a little bit of steam, we're plus 53. i think what we should probably do is go and political up investment banking and banking. >> so how would the call to break up big banks affect banks like citi group and jpmorgan? stay with us. with the spark cash card from capital one,

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welcome back, citi group and jpmorgan gaining today even after sanny weill made the case this morning that big banks should be broken up. >> i think we should split up

investment banking from banking. >> certainly provocative comments there. should you buy banks or should they be avoided. what would a split up mean for the banks in your estimation. >> i have never been a big believer in investment banking and commercial banking, but it gives greater diversification. so the bank analyst likes breaking the companies up because it would mean, you know, more instruments to trade against one another, but it would probably unlock a conglomerate. i think at the margin it makes the banking system less safe. the only free lunch out there is

diversification. this would make these big investment banks and banks less stable and more volatile in terms of their earnings. >> okay, ennis, let's go technical here, how do the charts look? >> citi group is our first chart and it's a three year chart. the $23 to $25 level is very important. it's been tested, it held in the fall, this is the third test in the last few months, and it's gotten weaker and weaker on each retest. if we look at jpmorgan, you can see that european banks have 25 year price lows in this week, and jpmorgan has fallen just like all of the u.s. investment banks have, i think jpmorgan and citi group will follow european banks lower. >> all right, that's the word on the technicals from ennis and

chris, we'll talk to you again soon. >> we're in the final stretch here and the market losing altitude for sure. we have seen the gains cut in half and then some. our next guest is predicting a 50% chance of a recession. why the economy is going over the edge, and timothy geithner saying quiet when being pressed about breaking up the big banks, listen to this. >> do you have any reaction? >> he's one of the architects of the super market concept. there you go, would it be in the best interest of banking investors? and do you agree with sandy weill's call to break up big banks? tdd# 1-800-345-2550 i'm constantly working my screens. tdd# 1-800-345-2550 checking the charts.

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levels of the day. it's dragging down the tech sector and weighing on the broader markets. >> yes, the biggest game changers have been happening in the final moments of trade. we have mike thompson from s&p capital iq, thank you for joining us. let's start with the earnings we have seen so far. what's your take on the earnings and the revenue that has been light. how priced into the market is this? >> i think it will be the trend for the year, just a couple observations. the numbers have been taken down dramatically. as long as it's only been a revenue miss, stocks have surged. the key to watch is margin expectations. any company that guides down profit margins will continue to decline. >> we'll make a call next week, but i was talking to kristine

short, and she is telling me wean dower at negative .6 so far. >> is that priced into the market? >> i don't think it is. >> no, it's not. >> -- brushing it off just a bit, isn't that telling us something bad is ahead, though? companies are having problems with their revenues, isn't that the big take away from earnings season, not the other way aaround and what you're looking at? >> the fact that the economic growth is slowing in virtually every region of the world is not a surprise. to some extent you want to ask you're what is the ultimate fear in the marketplace. dividends are good, the biggest fear is that the profit margins will decline to their historical levels.

as long as we avoid that we'll stay in the trading range. >> we were starting to get the word that the fed could act sooner than later. how does all of that factor into your investment decisions in the next two to four weeks. >> what they've done so far has not been satisfying, and they have to be reallynext? they're loaded with liquidity, and people don't want to borrow. >> i'm beginning to question this, all of this stimulus, maybe monetary policy at this moment in time with rates at rock bottom levels, maybe this is not the answer. >> it could be they need to replait the economy. now it feels if you talk to some institutions that it is the

equivalent of pushing on a string. >> you're saying you're less negative to equities, what would you be a buyer of then? >> there are certain large health care companies i would be a buyer. some of the energy names pulled back in a week or so strike me as attractive. >> in terms of getting exposed to equities the rest of the year, what are your favorite groups? >> those are the sectors, i prefer larger cap names to smaller cap. i'm a fan of companies that are generating a lot of cash and have yet to pay that cash out. where we at least have a possibility of having payouts. >> thank you for being on the program. we're about 12 minutes until the closing bell sounds for the day. do you industrials down 42 points and the nasdaq is

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welcome back, we have the market up, let's get to the market flash. >> watching shares of tpc group, the stock, moving higher on back of a published report that the company is discussing a leveraged buyout. the stock up better than 13% on this news. back over to you, scott. >> in the meantime, former citi group chairman sandy weills

sending shock waives out too old when he said maybe we should break up big banks. >> what do you think about dodd-frank? >> it's too many pages to read. what i'm saying you can do in two or three pages. people would understand it. >> isn't that the problem with all regulations. >> that's so funny. >> they're like 8 million pages long. >> half of the guys don't read all of the pages, by the way. there must be a less complex way to approach the structure of the banking system. >> i just think it's so interesting and you're going to have paul ryan on, and sheila bear said that she was shocked about the comments. >> here is a guy that pushed to

get travelers and citi corp to merge before the class ceiling had fallen. so to hear him backtrack and say wow, maybe financial super markets don't work, now that he's out of the business, it does raise a eyebrow. >> it resonates, right? it's one thing for a regulator to say something, one thing for a politician like paul ryan next hour to say something. it's different when a guy who built the super market says maybe it's a bad idea. >> and let's not forget who his protege was, he got pushed out, fired, and is now running the most powerful and largest bank. so you have that there. >> yeah. the legs on this one seem to be

long. >> we'll talk a short break and then the closing countdown after the break. >> we'll have all of the numbers after the bell when they are released today. mamama

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welcome back, wrapping up this trading day, and we're looking at a 50 point gain, but what a last three days we have had. you have a big come back on news of the fed. >> yes, the journal reported they would be open to new stiplus as early as next week. i was expecting a rally today, but the market definitely feels like it wants to go down. >> it has been a difficult market to keep up with. you had these losses and a come

back at the end, now you have gains and a loss at the end. >> yes, the market is straightforward. the fundamentals continue to be weak. some of it has been expects and the estimates have come down in front of it, and the market is reacting to the fed stepping in. >> allen, thank you for joining the conversation, what are you seeing in terms of flow there today, allen, in terms of commitments on the buy side? >> i have to agree, i think this is a day where it's just muddling along. i don't think anyone wants to commit too much. they want to see what the gdp numbers are this friday, and then a big jobs number. this is toward the end of the month for a three-day trading period here for traders. we have a three day settlement coming up. >> allen, how much will they be watching the facebook earnings.

apple got a lot of talk yesterday, but given everything that happened with facebook on the ipo, the first earnings report, zuckerberg will hopefully be on that call, how interested will you be? >> we will definitely be interesting. facebook had a big show a couple months ago, so we will definitely be watching and see what the earning wills be, but i don't think it will move the market that much. >> what else for economically sensitive names, gm, are you seeing any activity in the autos or more economically sensitive names ahead of the gdp report. >> i think with the economically sensitive name, a lot of the basic fundamental themes have been well established by the predecessors. so i think the expectations at this point are fairly low. to some extent, it's can they maintain their profit margins

through cost cutting and if they can the stocks can pop. >> when do you start to game when the fed would come in? >> i think the gdp number and the jobs number is the next big one. if that ticks up, i think we will see the fed move before september. >> are people expecting a move before september? >> again, i think it's priced into the market up to september, but you know maria, i think if they do a qe 3, it will not be the same as the qe 3 or the qe 2. i think the feds have a problem here. >> it may not have the effect you're looking for from an economic standpoint, what about from a stock standpoint? >> every time yove