the biggest ego trip of the week. time now to reveal the answer, and the ego trip winner is mitt romney actually. but earlier today we had mitt romney release his tax returns for 2011 and some years before, so he wins the biggest ego trip of the week. thanks for watching, everybody. >> have a great weekend. >> hi, everybody. welcome to "closing bell." i'm maria bartiromo at the new york stock exchange. we'll see big volume at the end of the day today. big rebalance coming up. scott? >> quad witching day as well so a big day on the street. i'm scott wapner in today for bill griffith. don't blink. today is quadruple witching friday n.simple terms it means it could be a volatile hour for the stock market. lately it's meant a higher close by the end of the day and we'll, of course, be all over that. we're following this developing story here out of the romney campaign.

his 2011 taxes being released at this moment. our john horwood first broke the story on the headline numbers over an hour ago and is digging through the entire return. more on this story as we get the info throughout the program. there is a lot going to go through, though, and no one will break it down better than harwood so we'll get to john coming up later on in the program. an unusually large rebalance happening at the close today. it will mean a handful of stocks will see higher than usual volume and price swings, so we're going to be following that as well. the dow jones industrial average right now ahead of that. up just a fraction. about six points higher on the industrial average. as you can see, we're well off the highs of the afternoon this friday afternoon. nasdaq, also off of the best levels with the game on the session of 5.75. check the s&p 500, and we see where that's trading really flat on the session, just about a point higher. the last day for kraft before it gets replaced by united health and the dow industrials. will this steady march to dow 14,000 in an all-time high

continue next week. >> we pose that question in today "closing bell" exchange w.us kevin o'brien of revere data, rod smith of river front investment group, cnbc contributor stephanie link, and our own rick santelli. kevin, you're a stock market bull, so this meltup towards 14,000. you think it continues for the dow? >> we think the market is headed in a pretty good direction. overall investor sentiment is quite positive. when you think about today, for example, with expirations, we call it the perfect storm of expirations and traditionally seen a lot of volatility there, and when you look at the vix, for example, over the past year, it's trading at basically a low, so the markets pretty much with thinking there's good general direction going forward, and we think that will continue for the dow and the broader markets. >> let's talk strategy here. stephanie link, what's your strategy going into this rebalancing? we know there's a lot of stock for sale of a handful of companies like coca-cola, united parcel service, ups, ibm, wells fargo and some -- some buying

activity here in apple, google, a handful of other techs. how do you want to play this? what's your strategy going into this rebalance? >> well, i think that, you know, if you look at stocks that are going to be impacted, there are going to be a lot of them so, you know, the way we've position it had as a long-term only portfolio, longer term, we look at, you know, any kind of stock deviation, so if there are big moves, big swings, we have our buy list and sell targets, and that's the way we are doing it. i think if you look at when you have additions and deletions from the interseize. >> like kraft. >> like kraft, that's a great opportunity, i think. we've been buying it and will be buying it if it's weak on monday because this is kind of a special situation and they are splitting up the company creating value for shareholders, so, sure, it may see some selling pressure on monday because it's coming out of the index, but i do think it might be a buying opportunity. >> rod, you're bullish on the market as well. what can get in the way of us and dow 14,000? >> well, 14,000 isn't very far

from here. i'd be more inclined to say what might get in the way of us and 15,000, and i think -- >> that's pretty optimistic at this point, isn't it? >> well, what i'm saying is trying to predict 2%, 3% move. that can go either way, but i'm always looking a year out, trying to look for the next 5% to 10% move. i think the chances are that that move will be up, but there's no question having had, what, june, july, august and now september as all up months, what's going to get in the way of the market's advance is its own advance. we've been rising at about a 30% annualized rate for four months, and i can pretty confident to say that that pace will not continue. that said, i do believe we'll be higher 6, 12 months from now. >> how are you investing? what does this mean in practical firms? >> let's talk specifics because since i was last on the show we have been doing some things. we've added to our positions in

europe. we've added to our positions in emerging markets. we've added to some of our higher beta positions. we did all of that over the last month. it would not be my intention to do any more until the market either consolidates what it's done or maybe gives me a better buying opportunity. >> rick, you know, if you get that dow 14,000, maybe it's because you do get that big rotation out of treasuries into equities. do you see any indication that we're about to see something sizable happen in that direction? >> you know, it doesn't appear so. now, i can't say if that won't change, when we get close to the elections, questions about bernanke, but at this point there was some good buying today, for example in, treasuries. we are down about ten basis paints on the year in a ten-year judge, and what's fascinating is this is a week that's been characterized by better than expected housing data, and housing's important. you know the agency buyback program already under way. we learned yesterday the fed was the net purchaser of a little

over 17 billion in agent mortgage-backed securities. what's fascinating is several of those days in the secondary market, they were buying more than the primary issuance of that day. they will get their desired effect. we just don't know if it gets passed along. >> kevin, let me get back to you in terms what have you want to do in the market. what do you see as equity cat lifts in the next couple of weeks and the election? >> the key is the election itself. someone will have a mandate the day after the election and that will provide clarity. the traininglated action by the ecb, the fed and the bank of china in terms of general direction in monetary policy is a bossity. rick just hit on it. i think one of the beneficiaries will be real estate, imagine, that and looking at the real estate supply chain. we've seen a couple of subsectors. home builders up 12.5% above the s&p in the last quarter. construction materials and mortgage banking services are outperforming 3-1 over the s&p, so we think there's positive direction in those sectors.

>> hmm. >> all right. >> thank you, guys. we appreciate it. stephanie. thank you. enjoy the weekend, lady and gentlemen. >> stef, we'll see you on halftime soon. presidential candidate mitt romney is releasing his full 2011 tax returns. chief washington correspondent john harwood now with the details. over to you, john. >> reporter: maria, mitt romney is acting today to try to diffuse a controversially that has dogged his campaigns some months and to do it on a week when he's receiving heat over the 47% fund-raising comments. the top line showed he made $13 million in 2011, paid $1.9 million in federal taxes for an effective rate of about 14%. he also released a ten-year summery of the effective tax rate that he had paid, said he paid an average of 20% of his income over that 20-year period

and never paid lower than 13%. now to put this in context. the average american pays an effective tax rate of 11% on their returns. mitt romney's overall return or effective rate average is lower than the average millionaire however. the average million plus income filer pays about 25% in effective rate, mitt romney is less than that, but interesting lit return raise an issue with something that mitt romney said earlier this year which was that he said that -- americans would not want a president who paid more than he needed to in taxes. he did pay more than he needed to to keep that rate at 14%. that's because mitt romney only claimed about half of the 4 million he gave to charity in 2011 as a deduction. here's what mitt romney told abc on that subject earlier this year. >> my view is i have paid all the taxes required by law. i don't pay more than i legally

do, and frankly if i had paid more than are legally due i don't think i'd be qualified to become president. i think people would want me to follow law and pay only what the tax code requires >> you say you would go back and look. you'd look for us? >> i -- i haven't looked at the tax rate paid year by year. i know that i pay a very substantial amount of taxes, and every year since the beginning of my career, so far as i can recall. >> reporter: now, michelle davis, a spokeswoman for mitt romney has put out a statement on this issue saying that mitt romney had signaled you don't need to pay more than you owe but that he was in a unique situation having given that pledge to the american people that he never paid lower than 13%. one of the issue now is whether that quells criticism from democrats. harry lead, the senate majority leader, said he had heard from a source that knew mitt romney that he didn't pay federal taxes. mitt romney owed federal taxes

every year for the last 20, according to summery released. >> such an interesting debate to v.everybody on the dem side wanting mitt romney to release the tax returns. got the tax returns for 2011. it's not anything that anyone didn't know, you know. he, according to the tax code, that we live by >> exactly right. >> did everything that he could have done right, and i think people will vote based on the issues of the day. they will vote on job creation. they will vote on economic growth. do you think that these tax returns are going to sway people one way or another in terms of how they will vote? >> no, not necessaryly. the debates at end of the day are going tonight ultimate decider. >> that's a make or break. >> for people on the fence, and there's a statement out, the romney campaign i think sent this out, but it's from a former irs commissioner who says, and i'm quoting here, there is no indication or suggestion of any tax-motivated or regressive tax-planning activities occurring. >> yeah. >> so to your point he's doing what the law have said. maybe people have a problem to the law. >> i think a lot of people have a problem with the tax code. there's no doubt about that.

>> john harwood will certainly come back on with any new developments that do happen from the romney release of his tax returns. meantime, we do have about 50 minutes to go before we ring up the bell, close out this week on wall street. dow industrials holding on to a gain of 11 points and nasdaq higher by 7.5. >> it's going to be a big hour. don't go anywhere. still a lot more to come on this edition of "closing bell." coming up on the "closing bell," is your retirement nest egg safe? a new report says mutual fund managers may be big a game of high-stakes poker with your money. what you need to know to protect your future is straight ahead. plus, unintended consequences. are companies increasing their payouts as a waive offsy of off the uncertainty over the looming fiscal cliff and is that hurting the economy? former hp chief carly fiorina weighs in with her take.

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well, the nasdaq has been hot, hitting a new 12-year high. >> heading up on two stocks that didn't participate back in 2011. apple closing with a new high. hit $705 on what looks like a clearly strong debut for the iphone 5. google having a pretty good day with a lot of people complaining about the new apple map system on the iphone 5. google set to close at a new five-year high and within 9 bucs of an all-time high, all-time closing high. google, maria and scott, has actually outperformed apple so far this quarter. both stocks trading at better than average trading volumes today on this quadruple witch. back to you. >> bertha, it has been quite a run for shares of google over the last couple of months. to a story every investor

should pay attention to. morningstar has found some mutual funds are making themselves look better in today's tough market environment. what's the secret to their success? >> might not like the answer. seems some fixed income funds are riskier and measuring their performance against the benchmark made up by safer investments, thus giving a lower return. so it worked out this time. a dangerous game because fund investors looking for safety may actually be in riskier funds than they realize. joining us now to talk more about this is jacob wolfowitz and scott kimp ball also joining us who runs a corporate fund who says the investor must be the ultimate check and balance here. gentlemen, thanks for joining us. >> thanks for having us. >> let's talk what's behind this. for starters, mutual funds are charging high fees. you don't have the transparency that you have with exchange-traded funds. you say this trend has only

gotten worse since 2009. why? >> well, i think what you're seeing is the index has had an increased allocation to government-backed securities. treasury bonds make up almost 40% of the barclays aggregate bond index. government-backed securities make up nearly 80%, so i think there's a lot of hesitancy on -- on bond managers to track that index. they would not want such concentration as 80% of their portfolio in government-backed securities. >> scott, you're a portfolio manager of a bond fund. what do you make of all of this? what do you say to it? >> i think he hits on a very important point of the allocation of treasuries. all knows the story regarding very low interest rates, when investors, whether you're an institutional investors, they need to hit a certain rate of return or you're an individual investor who needs fixed income for current income, you look at the ten-year treasury hovering around 1.7%, 1.8%, and it doesn't meet your return assumption, so a lot of investors there are looking to their managers to meet the

assumptions and find the types of returns. in many cases have you to look at securities that might not be the traditional fixed income benchmarks. >> a lot of investors don't know they are in a fixed situation. managers want to get a great return, not necessarily cut corner but not really follow the mandate that investors set. >> having a benchmark outside the mandate doesn't create risk. i'll give you an example we use when the question comes up from our own constituents. treasury protected securities are outside the barclays capital aggregate bond index, so as are floating rate notes which adjust with up ward interest rate pressure. one could make the argument you're adding potential and reversing the risk that's inside the fund itself. >> do investors think by and large this is happening? most think investing in a mutual fund, especially a bond fund, is probably among the most safe

investments that they will make? >> i think most investors recognize that the index itself has a lot of risks to it. certainly we saw a lot of bond managers underperform last year because they didn't own 30-year government bonds. now if you're concerned about rising interest rates, and i know a lot of my clients are, why would you own a 30-year treasury bond? so i think a lot of bond funds are actually becoming a little bit more diverse than the index they are also avoiding some of the problems that may arise from rising interest rates. >> you know, scott, obviously it's -- at the end of the day, it's up to the individual investor, right? but we saw what happened in the housing market, right? you get a mortgage. you can't read half of the information that's in there. you don't understand what it says. in this case they put the prospectus, yes, in the investors best interest. it's their duty, their mandate to sit there and go read it, but in many cases they don't or can't understand some of the information, or it's 40 pages long, and they don't know what they are reading. >> i think you bring up an excellent point.

one thing i'll mention is that the bmo tch corporate income funds, the ones you mentioned, we follow very strict relative value discipline so what that means to individual investors, something they can use from our process to assess their own risk, if you're looking at two mutual funds and forecastsed income, one is paying 3% and one is paying 6%, take a look at holdings on the top ten. the top ten bonds in those portfolios. there's a wealth of information out there on the internet and yahoo! finance. take a look at what the debt looks like on the balance sheets of those types of issuers and see if you're getting paid two times the amount of income for five times the amount of debt. >> yeah. well, real quick. i mean, how are the mutual funds doing? mean, are they still underperforming? >> this year's generally been a very strong year for mutual funds in general, especially bond mutual funds. last year was a very difficult year for many pond mutual funds. as i mentioned, the 30-year treasury did very well last year. very few bond managers are h an

overweight to that position. >> we'll leave it there. thank you very much. very important topic and we appreciate your thoughts on it. 40 minutes before the closing bell sounds for the week and the market right now is higher by about ten points. >> google maps are gone. it's apple's way or the highway when it comes to maps on its new operating system. why our herb greenberg says this is ultimate in arrogance from apple, but will it hurt the stock? >> and then as the apple and google rivalry may be breaking out into an all-out war, which are you better off owning? right now, we'll take a look apple versus going. stay with us. [ male announcer ] how do you trade? with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time. which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying...

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welcome back, everybody. in a really bad economy we see soup lines, right? but this is the apple economy. there are scenes like this that we're seeing across the country today. hordes of apple maniacs lining up in some cases days in order to get their hands on the iphone 5 as soon as possible. meanwhile, the google maps controversy on the apple's new iphone and operating system is a direct result of the hostility between these two companies and the amazing competition. which is a better stock to own right now? let's do talking numbers right now. take a look at the fundamental and technical side of the story. gentlemen, good to see you. thank you so much for joining us. j.c., let me kick this off with you. the stocks, google versus apple. >> a very tough question.

like asking me what do i want for dessert, ice cream or cake i? want them both. i think i'll take google. why i'll wait for apple. good company, good stock but the stock gives investors a chance after a nice run to buy the stock at a better price. have a short-term six-month chart of apple here and notice the lows in apple also correspond with spikes in volume. this shows me that institutional investors are waiting for the stock to pull back, antds then they are piling in, so if i'm an investor i wouldn't be buying at the high. i'd wait for a slight pullback and for volume to pick up and that's my sign to enter into apple. >> very interesting. every time it drops it's time to pick it up. >> what about google? >> like it, too. different for a. you want to buy right now. yes, it's overextended on the upside but if you take a look a longer term chart, you see it consolidated in multi-years, that's like compressing a spring. spring is released, and this is rocketing higher. 2010, 2011 and twfn highs, yes,

it's extend, but we think it's going higher so we want to jump on board. >> sounds like you want to buy google but wait for a better entry point to buy apple. buyer of apple, too, but not until it goes down. let me get to the technical side. you initiated apple with a buy rating. to what extent will the sale of apple 5 impact the buy? >> i think it's kind of a sideshow. google can really stand on its own. fundamentals are really strong. even the desktop, still. growing rate of 15%, 20%. mobile is clearly the story going forward, but, remember, they have android and over 50% market share, so iphone helps on the margin, but certainly over time mobile penetration will help, but i don't think iphone in and of itself has real impacted our rating. >> real quick, you know, you're initiating coverage of apple at

$700 a share. i mean, where's this going? >> google. >> i'm sorry. initiated on google, but what about apple? >> oh, apple, we don't cover, so i'll stay away from it, but just going back to google for a second. 830 target and our numbers are actually fairly conservative. i think the stock could actually make it substantially higher over time. >> both would buy google right now. good to have you on the program right now, gentlemen. thank you. scotty, over to you. >> all right, maria. thanks. about 30 minutes to go before we close up the week. dow in a bit of a holding pattern, up ten points. a lot of cross-currents today. quad witching friday, rebalancing and all the other stuff going on today as well. remember this famous quote from president kennedy? >> i believe that this nation should commit itself to achieving the goal before this decade is out of landing a man on the moon and returning him safely to the earth. >> well, the head of the

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. welcome back. mcdonald's, texas instruments, microsoft, some of the companies hiking dividends this week, and more and more companies are following the trend. plus, there's a record number of special dividends this year. while that may be good news for investors, it could also be bad news for the economy, because some think companies are using their cash this way buying back stock, paying dividends instead of hiring people because of the uncertainty around the fiscal cliff. a look now at unintended consequences. >> reporter: america's cash hoards have been rising to record levels for years and instead of hiring companies are giving it back to shareholders in the form of dividends.

with the looming tax cut expirations, tax cuts at 15%, could see that rate ratchet up as high as 43%. based on a similar scenario in 2010 where the bush era tax cuts rolled out special dividends spiked dramatically according to goldman sachs. one-time dividend patriots represent roughly 45% of the entire year's dividend volume. in this case 2012 is on pace to be a record year. so which companies have cash to burn versus their debt? well, many analysts point to wynn resorts recently flush with 712 million in cash that was freed up. goldman points to other top prospects for these special dividends like money market fund manager fed rated and franklin resources and aerospace company general dynamics. companies are getting this cash off their books meaning it won't go back into the economy, but it will drive investors into the stock market. investors who say the possibility of a dividend hike is reason enough to put your money there and invest. maria? >> oh, it's really interesting,

kayla. you know, we're looking at this continuing, scott, because people are worried about the expense of health care, the expense of actually adding new heads to the payroll. they are putting the hiring plans aside and instead using this monster cash flow that they have. $3.6 trillion and they are buying back stocks and buying dividends. i don't know if it's bad for the economy but it eliminates the chance for hiring. analysis from former hewlett-packard ceo carly fiorina. good to have you on the program again. >> great to be back with you. >> are companies just deciding that the uncertainty over the fiscal cliff just makes it too risky to hire? >> i think there are two things driving companies not to hire. the first and most fundamental is the state of the economy, thas that is, the state of demand. as you and i have talked about before, i think we actually are experiencing a simultaneous global economic slowdown, despite the relatively good news in the housing market. i think the u.s. market demand,

that is, is still quite weak. europe is clearly in an even deeper recession than we had imagined, even a month ago. china's trajectory continues to go the wrong way, so i think fundamentally this is a demand problem. there's no question that uncertainty around future tax rates, uncertainty around where government policy is heading adds to that uncertainty, but a company has a very fundamental decision when they decide to increase the dividend or pay a dividend, and that is the cash on my balance sheet, am i going to invest it, or am i going to return it? and if the investment prospects look risky, then they get to a place where they need to return it to share holders. >> carly, do you think companies and ceos are using the fiscal cliff as a bit of an excuse? i mean, who is to say once the fiscal cliff is solved, that all of a problem there will be a flood of hiring? the fact of the matter, is you know it very well, having to make decisions. companies have gotten leaner. they have gotten meaner and they are used to doing more with less.

why will that change just because of a policy move out of washington? >> i don't think it will, and, in fact, i think anyone who expects a flood of hiring when the fiscal cliff is resolved is not being realistic. conversely, i think there could be a very clear economic impact if there are massive cuts to government budgets without thinking those through. first of all, the fiscal cliff will not be resolved any time soon. i think it's very clear politicians will figure out a way to kick this can down the road, but i do not expect companies will immediately begin hire when this uncertainty is resolved because fundamentally what they are hiring for is to deal with demand, and if demand is soft, hiring is going to be soft. >> you know, there's got to be some truth to this. you know, would you, you know, hire help and buy new furniture and do all sorts of stuff in your home and bring on more people to your own payroll if you don't know where your tax rates are going to be, you don't know who is overseeing you or

regulating? so i think the fact that we don't even know what the tax rates for companies are going to be in the next year has -- has pretty good weight. >> yes, i agree with you. i'm not saying that that uncertainty isn't a factor. it clearly is a factor. i also think, however, that demand is a factor so if you lifted the blanket of uncertainty by resolving the fiscal cliff in some way, resolved it in a way that helped companies hire, wouldn't that be great. depends very much on who is elected and even then i don't think you'll see this sudden influx of hiring unless demand is more robust. >> carly, since we have you and before we let you g.obviously used to run hewlett-packard. this week marked one year on the job for meg whitman and her turnaround efforts there. how do you think she's done? would you buy a share of hb stock today? >> well, look, meg was dealt a very tough hand. i've said that many times before, a company that majored on cost-cutting for too long,

has not invested for growth or innovation. i think honest lit jury is out. while meg has done some cost-cutting that is clearly necessary, i think there still is not clarity around what is hewlett-packard's growth strategy going forward. where are they going to make their investments? how are they going to make some of their previous acquisitions pay off? think that's a story yet to be sold. >> sounds like someone saying they wouldn't buy any stock, carly. >> well, i own a lot already. >> all right. >> of course you do. thank you, carly. we'll see you see. carly fiorina. 20 minutes before the closing bell sounds for the day and for the week. a big 20 minutes coming out with the rebalancing of the s&p 500. dow industrials up around five points. >> the bulls have ruled friday recently, and the bears come out of hibernation on mondays, so should you sell into today's close? >> then, meredith whitney has been warning about a cries in muni bonds now for a long time. here's what she told me back in march. >> there's been every effort on the part of the states to

prevent really this tidal wave of defaults which is going to happen sooner or later. it's just gotten, you know, it's -- and look, it's happening at an accelerating pace. >> so why is muni bond guru alexandra lebenthal seeing huge demand for this asset class? she will join us later on in the program and i'll speak with meredith whitney monday at 3:00 p.m. on "closing bell." stay with us. gs, a crash management system and the world's only tridion safety cell which can withstand over three and a half tons. small in size. big on safety. yeah, you -- you know, everything can cost upwards of...[ whistles ] i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan.

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all right. as you can see. we've given up most of the gains we saw earlier in the session. dow industrials going megtive by four points, so i do want to point out though. september obviously coming to an end. if september goes positive. 11 of the last 12 months for the dow would be positive. you haven't seen that since 1953. an amazing stat that shows the resilience of this stock market and what exactly the dow has done over the last many months. you know what's happening with oil prices as well? rights for the first time this week to settle just below $93 a

barrel. sky-high fuel prices meanwhile spurred delta's decision to buy its own refinery, and that refinery is about b to go online. kate kelly, as you'll recall, broke that story and joins us now with the details. nice to see you. >> nice to to see you, scott. months after delta airlines made history by buying its own refinery, it's about to begin producing jet fuel. delta spent the summer staffing up its 185,000 barrel per day plan and putting it through a required renovation process. now it's running the facility 24 hours a day testing the systems to make sure they work. when the jet fuel is ready to use, it will be piped up to laguardia and jfk, delta's new york hubs but the move has been controversial, a bold move to reduce a staggering fuel bill of $12 billion a year and others say it has no business being in a field it has no experiment. recently i learned united continental, delta's biggest competitor has also considered a

refinery deal. we routinely evaluate opportunities, and we have evaluated refineries as a means to improve our returns, united told me in a statement. a united official took a preliminary look at a small refinery for sale outside of hues fob, i'm told, but for now united isn't pursuing it. that's because the next best use of a spare 100 million, united said, is to pay down debt. i'll keep you posted but no developments as of yet. we'll look for some possibly from united. >> kate kelly, thanks so much. the demand for u.s. crude oil is down 4.3% in august year over year, but in that time crude prices are up 10%, while gasoline is up nearly 12%. let's take a closer look at this space as it relates to the overall market. with us helene croft from barclays and david, do you worry about oil impacting the economy and markets? >> definitely, maria. the last time you had question 1

and qe2, quantitative easing, oil prices went up, and a little bit of the positive effect was taken away by crimping the consumers' wallets, so qe3 and geopolitical tensions specif specifically between iran and israel are one of the things that we think have been behind this oil price rise. that having been said, we do look for it, our analyst, look for it to fade between now and year end for three reasons. number one, softer demand from china and europe. >> seasonal. >> softer demand china and europe. number two, increased production from the united states, canada and the north sea, specifically norway. and number three, iraq. iraq has continued to increase their production. you know, they have as much reserves as iran, so they are the third or second -- tied for second in the world of reserves, and iraq has put in these offshore terminals, and they have been able to ramp up the exports. that is likely to put some downward pressure if there's no geopolitical blow up, maria.

>> i was just going to see, weigh the geopolitical risk versus the spr noise and tell me where oil goes between now and the end of the year. >> well, we have 117 for the end of the year on brefnlt now our view is that the geopolitical noise is not likely to seriously dissipate, because there's no sign of progress in the iranian nuclear negotiations. there's no sign that the standoff will be eased any time soon, and without any easy off ramp, we don't see how this situation is resolved, so we think potentially 2013 you're really looking at a question of does iran get nuclear weapons capability, or do you take military action to forestall that? we don't see the noise really going down on that issue, and we look at rest of the middle east and say look at the situation in libya. the violence in the eastern region potentially has big implications for oil production. in the run-up to the libyan elections in juan, we are 690,000 barrels taken offline because our militants shut down the facility just for political

reasons. if we saw any major uptick and unrest in eastern libya, oil companies could curtail production. >> yeah. >> so we think the risks are really out there on the supply side in the middle east. >> halima, that's a high number. 117 is your target on brent. what's your target on crude oil? crude right now at 93.11 a barrel. >> it terms of wt sydney. >> yeah, 104. >> 104. i mean, what are the implications of $104 oil on the economy? >> well, you know, one of the things you raise the issue about the spr, and i do think that's potentially something that the obama administration will be really concerned about looking to tap, if we do see a significant run-up. i do think you do have to weight the fact that the obama administration is likely to tap the spr so that could put a temporary cap on a run up in oil prices. the last time they capped the sp rth effects were only felt for ten days. >> let's talk rebalancing, david. big s&p rebalance coming right now at close, and you've got a handful of stocks that will see

very high volume and sizable moves. what would you be doing in this environment? >> i think it's time to use this rebalancing and this dislocation, add some energy stocks to the portfolio, okay? i think we're both together on that. want to own some exxon mobile and williams brothers and williams partners, wbm, wmz. >> do you want to weigh some of these imbalances? >> got a size ability amount of stock for sale in coca-cola, handful of others, ups, ibm, wells fargo, good imbalancings on the supply side for technology. >> no question. >> do you want to use those? >> follow those in the tech space, energy space, those two in particular and also the health care space. your fooizers and abbotts. both of those have done well this year. the qualcomms, and we would continue to buy apple on this iphone 5 development. >> the mania. >> the mania that's going. we're still there. been in it, scott, as you know,

since earlier this year and would use the dislocation of any of these groups, energy, health care to buy stocks. >> kraft coming out. >> are you still bushel on the market? closer to 14,000 than 13. >> negative for a long time. >> that having been said, i think the market is ahead of itself, maria, scott, because the volatility is so low this, vix index of 13.8 right now, volatility is low. would i have an umbrella and carry and imblah wiumbrella rig. be prepared for rain and i think it could come from the geopolitical. no one knows that. this is one of the things that's in there and the profits and gdp numbers are going to be lower. so we would use this to trim in the overall portfolio and concentrate. >> fire up that umbrella. >> ten minutes to go before this bell rings. you can talk to us until monday, i know you could. >> up next, one of the biggest names in the hedge fund world

issuing a dire warning about class warfare and the economy. >> hitler came to power in 1933 which was the depth of the great depression because of the social tension between the factions. >> so could another downturn in the economy really bring on something as horrible as nazism? >> and later, bank of america still talking, bank of america was bailed out with u.s. taxpayer money so why have some executives at the bank discussed the possibility of taking the word america out of the company's name? it's an incredible story. back in a moment. david darch is staying here. >> in the house. insulin users test often.

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welcome back. hedge fund legend ray dalio on cnbc today talking about everything from the fed's latest move to stimulate the economy, to why every american should own gold. you know what? before we finish reading the story, an awful lot of applause here in a moment. it is 2012 national pow-mia day, and i know people will hear the applause and want to know why it's happening, but that is why you'll be seeing. there's service men and women on the floor today as we remember

our p.o.w.s and m.i.a.s around the world. >> walking up to ringt bell. >> so muand so much applause he the nysc. >> saying how ray dalio was on cnbc talking about the fed's move to stimulate the economy to why everyone should own some gold. >> you know, he also gave a dire warning about another potential downturn in the global economy and how history says with the nations already so stretched fiscally that could shape the political landscape around the world in a very scary way. >> when people get at each other's throat, the rich and the poor, and the left and the right and so on, and have you a basic breakdown, that becomes very threatening. for example, hitler came to power in 1933 which was the depth of the great depression because of the social tension between the factions. so i think it's very much dependant upon how the people work this through together and worry about the social elements.

>> and, of course, we did see repercussions of this in a way overseas when you saw really the social networking impact on the ground when egypt fell, when, you know, dictators coming down because there's this unrest you don't want a situation where everybody hates each other in this country so much that you've got unrest all over the place. >> yeah. this issue of income inequality, certainly resonates with a lot of people, and it's an issue that's not going away. >> i don't know if it's income inequality as much as it's income differential. an income gap is definitely what we, have but i don't know if you necessarily can expect income inequality, everybody having the exact same thing. then you're talking about russia, right? >> but i think there are people who think that that's a serious problem in this country. >> income differential is, definitely is. >> a gap between folks and as to gold, he made it clear that he thinks you should buy gold, even though folks like warren buffett don't think that that would be the wisest investment that you could make. >> and he does own a bit of

gold. we'll take a short break and get the closing countdown after that. >> and after the bell, can cancer be cured in the next decade? one doctor says yeah, and he's got $3 billion to go do it. he joins us in the next hour of the "closing bell." >> and then the nfl involved in a bitter dispute wits referees. many say it's impacting the outcome of the game. are the replacement refs damaging the nfl brand? award winning reporter peter king with us. bob...

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. welcome back to the floor of the new york stock exchange. got a couple of minutes before we close up this week on wall street. david, let's talk about your philosophy right now where this market is going. your guys over at morgan stanley have one of the lowest targets on the street. 1167. dr. adam parker on this program and others many, many times. why are we to believe that the market is not going higher from here? why fight the fed? >> great point. you've got this monetary stimulus as a tailwind pushing the market higher. the headwind, which adam talks and writes a lot about, scott,

relates to earnings, and he thinks earnings are going to come in down 1.3% next year. the consensus is for it to be up 13. 11%, 12%, 13%. >> a lot of people are talking about multiple extension, david. >> he does not see that as a likelihood for three reasons. number one, european slowdown, okay? u.s. flirting with a slowdown, okay? that's number one. number two is you've got this fiscal cliff facing us. >> i've heard about that. >> and we'll have at least half of it will hit us. number three -- >> this year? >> number three, scott, with the interest rates so ultra low, the banks, he believes, that the consensus for banks and the consensus for consumer spending is too high. those three reasons, europe, u.s. slowing and the consensus being too high on the earnings. that's why he's got this lower earnings for the profit for