reading it. it's like busting out a dirty mag in the airport. >> all of my friends have read it. >> "closing bell" is coming up, see you tomorrow. hi, everybody, welcome to "closing bell," i'm maria bartiromo, the market selling off after mario draghi failed to back up talks of saving the european economy. >> that announcement spooking investors here in the u.s. draghi falling short of last year's pledge when he said he would do whatever it talks to save the euro, i guess he just meant night right now. in the markets right now, ugliness off the lows though, down 138 points.

the s&p -- the nasdaq rather down 17 points now, half a percent decline there. the s&p 500 index is down to 1360. stocks are taking a hit after the european centralback did not deliver on the pledge to do whatever it takes to save the euro. as we await the jobs numbers tomorrow, is a bad number what we need for a federal reserve intervention. we have michael day with us, eric lashelous with us, rick santelli and steve least man with us. >> maria, i disagree right off

the bat. i believe the market would like a good job's number and some conviction that jobs were turning around that markets would rally. one job's number is not going to make it. >> it's been horrible numbers the last three months. >> we have, there is some hope out there that the abp must remember could be pointing the way. i think the consensus is probably more than 120 on the street is what they would be looking for. that would be modestly satisfying but not enough. >> michael, we're down 130 plus points, you were saying it's a bullish day. >> yes, you have small caps outperforming the large caps. you have defensive sectors not outperforming in a disturbing way like you would in a big decline. internally in the market there is strong behavior. we could have been down considerably more than we were right now. >> the market rallied 400 points

last week. >> and the expectation for the fed, for the ecb, and then we get squat this week. why do you think they set us up to expect something and then give us nothing, what's behind this? >> i don't know that the answer to that is a very nice answer, but i just think there is a form of disconnect where a plan welcomes something much more tangible than it is in the eyes of the leaders of europe. consider it this way, they are having issues on how to manipulate rates to a point where they can be afforded. think about what we're saying. i know you don't always agree. you think the stabilization and the solution, having one before the other, and i contend if you can't manipulate rates, so spain can have reprieve for awhile, the solution is a tall order,

and the currency at 124.05, but steve, before you talk, i absolutely agree. i think a good number tomorrow stocks rally a couple hundred, and bad number they break a couple hundred. >> draghi split the difference between us. you're saying long term solutions, i'm saying near-term stability. if he can be taken at his word, the idea of linking ecb action to the broader efs program is a way of saying if you're on the right road, we'll fill up your tank and help you along here. ecb action to a company committed to reforms can be very powerful. >> real quick, i agree, but the problem is that the kind you're talking about is at the bottom of the grand canyon, i don't care how much gas you put @ in, before they have a solution they have to get the car back up and

on level ground. >> also you have to ask for the gas before they'll give it to you. >> that's true. to admit you're out of gas. >> and that's a big deal. spain may not want to ask for it. >> right. eric, tell us what you're thinking about this market response and what your expectations are for tomorrow as well. >> listen, i'm as disappointed as anybody that the bankers didn't deliver, they are playing the long game here, i don't think all hope is lost. rumors coming out that the ecb is preparing to contemplate -- >> really, the bundis bank had a feeling in this and that was the resistance. michael, weigh in on resistance. knowing what we know today, in terms of stimulus and

uncertainties, how do you want to be invested in capital? >> we're still up roughly 8% year to date. i think the key here is really going to be if the ecb and the league of extraordinary bankers can prevent an event. the fear is a a leeman repeat. it may be just enough for the markets to continue their rally despite nobody believing in it. >> steve, for something to compare to tomorrow, what areth expectations for the jobs number? >> the number was 100,000, i read a lot of stuff in the wake of -- a lot of reports in the wake of of the abp report of guys looking for 120 to 130. so 115 or 130 would be the

baseline. again, this is the key that bernanke said would unlock the keys to the federal reserve treasure chest right here. does that put the fed on hold? >> i think it does, and i think that's been the problem with the data. 1.5% gdp growth. it's enough to move the fed closer to action been now enough to pull the trigger. 100,000 plus on jobs closer to action, not enough to pull the trigger, we need to know what those triggers are, and i know we keep asking this question, but it's unclear what the trigger would be. if it looks like we're stalled for an extended period of time, that could be enough itself. >> if we get a bad number, what kind of reaction do you expect? >> markets have been

unbelievably buoyant lately. when i think about the fed, i think the feign effect the central banks could have is a psychological effect. it's a preshl resource, and it's just not that bad right now. that's the case for the u.s. absolutely and arguably the case in europe in terms of yields and relative highs. so i think they sit on these until it's needed. maybe that's december or january for draghi. we don't get them until they're needed. >> thank you for joining us, see you later. >> we're in the final stretch of trading for the day, a market off of the lows and we're down in triple digits. >> and we will be watching these markets on what has been a very volatile day, things are just getting started on this very big edition of "closing bell."

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welcome ba fidel ti and vanguard just issued procedures on their routing. we have more now. >> yes, fidelity does a lot of work with knight. when it concerns doing trading with knight today, they say we

typically do not discuss the details of our business arrangements with other firms, but you should know that fidelity routes customers orders through reliable markets. fidelity stopped routing orders through knight, and we have a statement from vanguard who routes roughly 12% of it's trades through and a quarter of it's trades through knight, and they say we continue to monitor the situation which has been a long time valued partner of vanguard, but we are routing orders through other vendors at this time. so certainly interesting. we should note as long as knight is a designated lawmaker, they

can still do business as usual. >> and fidel ti ity investmentsa big holder of knight stocks. take a look at this, yesterday, an $11 stock. we're seeing this stock plummet $10 million a minute, that's how much it cost the firm. $440 million in losses and they're blaming a computer glitch. >> this incident raises questions yet again about the use of computers in the trading process. is it time to put this back in human hands? bob, i think tom joyce of knight would be a little -- have a different answer that you do. you're saying leave the

machines, they're not to blame this case, right? >> no, the machines were programmed incorrectly in this case, so blame properly lies with the developer or developers of the software. blowups are not unique to machines. i was a trader on wall street in the '90s, and there were plenty of human traders that blew up also. it's survival of the fittest, poorly designed software, operated by humans or machines, occasionally blow up. that's what happened here. >> what needs to be done? how many years since the flash crash. it feels like the fcc and the cftc are powerless to address

these problems. >> i think the fcc foresaw events like this occurring and that's what led to the market access proposal for sponsored access. it mandated all trading firms to go through a suite of checks. a simple check would have presented this loss. a similar thing happened to my firm several months ago. we traded against retail flow, and there was a change i a system at a brokerage firm, and it led to a very similar problem. we lost $5,000 on this glitch instead of $400 million. so, like i said, poorly designed software will perform slowly, but that should not, you know, cause people to paint with a

broad brush, technology as a whole. technology is responsible for the advancements in the market and where we have gotten in the last 120 years. >> i think the important thing is, i agree, and for once we're not going to blame high frequency traders. but the systems are so complicated now, so interconnected, the potential for error is so high, i don't know what else you can be doing. do you think there are technological risk mitigation system built in. do you think we could actually control that? >> like i said, i think a simple pnl stop loss, if you lose more than x amount of dollars stop trading could have mitigated this problem. more things demonstrate there are risks with new technologies or platforms rolled out by the

exchanges. so the bats ipo issue that happened happened because they never hosted an ipo before. that could not be tested in real world conditions. yesterday was the first day of the new york stock exchange's rlp program. and so that's why this occurred. >> you're blaming this on the program that was introduced here at the new york stock exchange were saying that had nothing to do with it. >> tommy joyce said the problem was a coding error when they were trying to write new codes. and specifically, tommy said it was not the nyc's faculty -- >> no, i'm not suggesting it was the nyse's faculty, it was a new

system rolled out by the exchange, and traders were trying to interact with that and i'm sure most were successful, but people could not test their systems against this particular platform previously, we should have expected there was a heightened possibility for something like this to happen. i'm just trying to illustrate. >> do you think a 64% selloff in knight stock is warranted? >> i think it's exaggerated. if you look what knight went down, it was in excess of the trading loss. >> we have to ask him. >> i bought shares in the after market yesterday, and i'm not that thrilled about it. >> you were mentioning vanguard,

and fidelity, are among the biggest owners and they have taken a big hit. >> absolutely, thanks, everybody, we appreciate it. >> speaking of the man verses machine debate, facebook shares keep hitting new lows, technology got that stock off to a bumpy start that week and it has gotten bumpier. >> that's right, the selloff continues to the social media space. the stock plunging to a fresh record low breaking $20 a share today. according to morning star, 21 funds are already selling shares and the short interest continues to rueth rise currently at 13.5%. the stock is down better than 46% since listing on the nasdaq. linked in, that stock up 110%

since it listed. linked in is in the hot seat today as they release second quarter results today. but the real number to watch out for, guys, will be, of course, subscriber growth. >> yes it would, about 30 40 minutes left, off the session lows, and the do you is down 118 points. what, other than bleach, does clorox make? and how is the kpi doing according to colorox, we'll talk to the ceo after the break. >> which stock is the better buy right now? we'll look at that next, stay tunes.

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commodities been selling off today after the blank took no new action to support bailout, so the dollar is going higher today, sharon epperson has details. >> commodity traders took it to hard when mario draghi said he would do whatever it takes to preserve the euro, and that set the market up for some heavy bids and then of course it all came crashing down when of course there was no immediate action like mentioned. some of them anticipated it, but

they did not anticipate how steep it would fall and how quickly for so many commodities. it shows how the risk assets were really off the table in this session. looking at drops across the commodity sector. the biggest decline was in natural gas, futures plunging 8% today. we got a report that was greater than expectations. we'll see more mod raid coming up in the next couple weeks and saw a huge sell off in the natural gast market. >> okay, craft and proctor and gamble both trading down. craft set to report after the close tonight. which consumer good's giant is the better stock to buy right now. on the technical side of things, and on the fundamental side, our guests will help us.

what do the charts say right now? >> right now we love a lot of global consumer names. unfortunately p&g is not one of them. it trails by 10%, even after a 10% bounce from that july low. you see this well defined down trend now. within that pattern is sinister little double top has formed. we think going into earnings, any hint of disappointment, you could see a retest of that $16 level. you want to be a seller ahead of earnings, and one that we like going in is craft. this is in the height of macro uncertainty, it's a one decision stock, the type of stock we like, well defined trend channel, tracking that with precision, what we really like

about the stock are the successive double bottom base of support. every time we get one we get a surge of support. look for a retest up around $4 it 2. buy some craft and sell some proctor. >> let's talk about fundamentals. what about the forecast split up, what does that mean for shareholders? >> in my opinion not a whole lot to the value. at the moment this stock is valued closer to that of a global snacking company. the idea was to split up the two, but the entire company is trading close to that valuation. so to me, i think that, you know it's really a neutral, and we think there is better values in the packaged food group right now. >> what about kraft, would you buy into the rally? >> not particularly, ami pen any ahead of consensus for the

quarter. i think -- i agree that i also love global consumer stocks and there is defensive characteristics here, and there are some that are valued 5% to 10% lower. >> thank you, gentleman, clorox got a boost, does the company plan to raise prices again? don knauss will join us. >> the dow still down 118 points, well off the lows of the session at this moment. get this, the white house says having the government forgive mortgage principal will save taxpayers a billion dollars. the problem is the head of the regulator overseas fannie and freddie doesn't see it that way, so who is right? and who better to speak about

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welcome back, a big election here battle brewing in washington. >> they are saying it will save taxpayers to reduce the principal. the guy saying that runs the company that oversees fannie mae and freddie mac, he says they're very rosy assumptions and it could likely be a net loss to taxpayers instead. jared bernestein things it would help homeowners and taxpayers. >> so you're saying the government yiets down principals

and taxpayers save money. >> yes, fannie mae and freddie mac, and the taxpayers at the bottom of this, are facing about $45 billion in losses if you look at the eligible pool of loans. when they, and it's not the white house, it's the fhfa, when they run the numbers they find this is a very useful tool to have in their mortgage modification tool box. >> but where are the savings? >> it's in avoiding defaults and foreclosures, that but for the principal reduction program would happen. and these are savings that according to fhfa's own analysis would achieve forbearance. >> that's like my teenager daughter going out and saying

how much money she saved me because she bought some clothes on sale. it's unprecedented to have the government come in here and start mandating an independent regulator like ed marco to mandate this. it is a free market solution. >> let's be clear. do you have a problem with the math involved or the moral hazard? >> the moral hazard is the number one concern and then when i get into the matt numbers don't add up. >> let's be clear, the government cannot in fact mandate principal reduction. if ed de marco says no, that's the end of it. if he gets replaced it be be a different discussion. >> will he have a job next year if he say most to this? >> they are putting pressure on him.

i want to say that the government cannot mandate fhfa. and the problem with the analysis is it's not compared to what here. if they do nothing, they're looking at billions of dollars of losses. >> jared, what does this do to property rates in the whole equation of this. that's what where this moral as argue is pinned on. go ahead. i think you look at this and what de marco is trying to protect, and he will not go and mandate it, but for an teegs put this kind of pressure on a regulator is very troubling to me. >> those are good points, you're looking at $1 billion net positive, that's the way the numbers play out.

the moral hazard is your best argument, but here you have to realize the hoops that people, borrowers and homeowners have to jump over to get this principal reduction. they have to sign an affidavit of financial hardship and they may not get it done. i just don't see that. and if you look at what's going on in the street, the private lenders are not getting those defaults. >> so why even pursue it. if you're the person in the home, it's going to be tough to get that to begin, with cumbersome for the agency going through property access, so will it be worth @? >> i think so, and your point is well taken that we're not talking about massive numbers of people here. it's a relatively small prak og,

and i think it will help. >> but we have these other programs out here running. >> that's the program i was thinking earlier, if you aplay for h.a.m.p. and you're deems to be giving a reduction, yowl get the principal reduction, you might not. that's some of the barriers that keep people from gaming this. >> thank you. >> we're in the final stretch of trading here, a market down 110 points well off of the lows, in fact. >> stocks are selling off off the european central banks failed to report any action, but could a jobs report tomorrow morning save the day by forcing ben bernanke's hand? >> and after the bell, aig waiting to buy back enough stock from the government to make it a minority shareholder.

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welcome back, the markets cut in half for the losses of the day here.

the dow at it's low of the day was down 192 points, now down 126. the nasdaq down 11 points, the s&p still down almost a full percent there. but we're coming well off the lows of the day as we get ready for tomorrow's jobs report. >> a couple specific stock stories to report, mary thompson, let's get to her. >> news from the hedge fund world here. dan loeb fund is down and bringing the year to date performance up 5.5%. he did add a new position, and his top five positions were yahoo, gold, alpha, delphi, and

kraft foods. nothing from the fed, from the central bank, and we're having a hissy fit. >> should investors root for a bad jobs number to get a helping hand? we have two guests with us right now, good to have you on the program, gentleman, thank you for joining us. keith you say even the fed would not matter at this point, talk to us about that. >> people can call it the deja vu all over again market. it seems like we wake up and it's groundhog day. >> very headline driving and they're all align. >> and two years from now or five years from now it won't matter if they cut rates, but did business brow it's top line, margins improve, how is the competitive position.

>> isn't that all tied? if the federal reserve and the ecb come in, that doesn't take earnings down. doesn't the macro landscape feed into that? >> i would almost argue today that it's the reverse. the problem is you're not letting economic forces work. if you've got a debt problem, the solution to too much debt is not more debt, generally. it should not be that way. >> what are we going through here? >> the fed is increasingly being preserved to be pushing on a string, and we have taken a more defensive view. payrolls were growing between 100 and 250,000. that's the rate we saw in the 2004 to 2007 drug cycle. and now it's between 70 and 80,000, so i think the focus

should be on tomorrow's jobs report. it's up to the private sector now to do the best it can to move the economy out of the recession. >> so you feel the fed has done all that it can? >> the fed is getting less and less bang for it's quantitative easing buck at this point. but face it, the deceleration of economic growth we have seen from the start of the economic quarter is significant. >> for the longest time, it has been the strongest part of this economic recovery, what can you tell us about revenue growth? >> it's some of the poorest levels we have seen in a long time. it's exceeding it by three or four right now. if kwaun daytive easing has run it's court, kwaun daytive easing has as well.

it's a tough predicament. >> you like the market, what are you buying right now? >> it's fine to assume it's getting better, and if you can find value under conservative assumptions, if we're wrong and things are better, we'll do wonderfully well. we have a mix, where there is stress, boredom, pockets of inefficiency. >> is that in a sector? a particular asset class? >> it can be, the largest holding is a company that came out of bankruptciy called spectrum grands. a wonderful business and brands. >> a steady grower? >> slow but steady growth, and they have a value proposition that's retailing in this market. p&g and enegizer.

>> how much of the negative effect has been priced in? >> a portion has to be. >> some of it. >> but you're talking about horrible revenue growth. do you think the market is expecting that? or do you think we see a selloff this summer? >> i don't think the bad news is fully priced into the market. a few months ago, the s&p was expected to earn 105,000, and right now about it's 103,050. if the economy is inching forwards recession it will change everything. look what happened a year ago when the s&p tanked, that was session fears. >> isn't the average multiple about 13 or 14? >> it's about 12.5. >> that's lower than average. >> that's extremely cheap.

>> there's a reason things are cheap sometimes. >> we're heading towards the close here with about 14 minutes left. after having been down almost 200 points. >> bill, remember this? >> the ecb is ready to do whatever it takes to preserve the euro. >> really? >> the good old days. >> the market saying it was all talk. how can he fix it? the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the past. i'm howard spielberg of fidelity investments. the equity summary score is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.

within our mandate, the ecb is ready to do whatever it takes to preserve the euro. >> and we just keep playing if again and again and again. >> deja vu. >> it was just a week ago mario draghi made that pledge. >> and we thought what night be, will they have something to keep rates in check in but after a key meeting today, he failed to back all of that talk up with any action and that has investors scratching their heads

today, hitting the sell button. >> we look at the fed as well, i think, i agree bob kaiser, they only have so much ammo left. they have some, but not a whole lot, and they're saving it for a real crisis. we're not in total crisis mode. as far as the ecb goes, i think they're hands are still tied. the way the whole mechanism works, there are too many moving parts and pieces right now, they're still putting a squalsh on it. >> and the people in germany do not want the bailout, and some nations are not following the austerity rules. but i think for the ecb to come up and say we're going to do whatever this takes, why even

set up situation u such expectations. >> you want a job to some degree. you want to reassure your shareholders, and i think mario draghi, to some degree, he wants to reassure the markets that they will do whatever it takes, but his hands are tied to some degree right now. >> the fed is waiting on jobs numbers, 100,000 new jobs created is the expectation. do you think we see action in september? it's hard to believe the fed, i believed it was wednesday -- >> it remains to be seen the condition of the market or the economy at that time, but i don't think the fed will do much. >> closing countdown after this break. and the heavy hitter wills chime in on what's happening. maria will talk the fed, economy, and fiscal cliff.

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okay, 4.5 minutes left in the trading session. the mark is down less than 100 points, it was down 190 at the lows of the session. we want to look back on what is the unwinding of the draghi trade from last week, and we start with those instruments in europe that have most closely watched. for example, the span rosic 10 year note. there it was when he made the comment last thursday, and now with no help on the way it's going back above 7% today. we're at an unsustainable level right now. the italian ten-year note, the same thing. plunged last week as they were taking comfort, now they're going back up. the currency market, same thing, it went up, here comes the help

from the european central bank, now it's going lower. and watch this. these charts are going to look very similar to the euro chart. our markets follow the euro very closely. a rally last week, a rally for the dow, we have been unwinding since then, but now we're coming back there. getting ready for that unemployment number tomorrow. the ten-year yield at 1.84%. the risk off trade is going back to that market, and the price of gold now at a one week low at $14, back below $1600. as for the sectors, i'm just hearing them, a defensive play there with that and the consumer staples, art, what do you make of this come back? i guess we're getting ready for a job's number. >> yes, people are reducing some

risk. i think what you're going to see, depending on what number is, it will come out and then we will begin the day long debate. was that enough to move the fed or not. and i'm more worried about the fed over the weekend. >> yes, the impact was not as strong as it was in the past. >> the economy is in need of positive payroll growth. the truth of the matter is that disposable income has been flat since 2007. without income growth there's no economic growth, so the kpli start running out of gas. >> and lower interest rates won't necessarily solve that problem. >> you could make the wide market 90 to 115.

somewhere in that range, i'm for the 90 side. >> and what about this nonevent with draghi's comments today, now what? what are we waiting for? >> he came to the banquet with an empty platter. as rick santelli said, where is the beef? we're going to hear that over the weekend and start to get comments, the battle may be rejoined on monday. >> what about the ecb who has yet to really vigorously engage this crisis over there, what can they do? >> they should take a page out of the fed's play book. think about it from this perspective, the fed has down one, two, or three, the economy is not in that great of shape. so even if the ecb does qe, it could be a shot in the arm. >> arthur, as always, a nice