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tv   Street Signs  CNBC  May 29, 2013 2:00pm-3:01pm EDT

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we are seeing an improvement in the tone in all the three major indexes. >> basically cut its losses in half in the hour we have been on the hour. thank you all for watching. that will do it for us. >> have a great afternoon. street signs begins right now. >> sit is the trillion dollar question. are stocks december tinned to fall? we're going to look back at 100 years of data. it needs a hit. what should apple make next. a watch? a tv? a robot made? we're going to lay it out. plus china going hog wild over smithfield foods? but will a deal really get done? who in the home is really bringing home the bacon? >> that is a good question. if you happen to check out the
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front page of usa today, you would think the world is a perfect place. super tuesday's u.s. home prices rising. all let's get out to josh and rick. josh, what are the traders telling you about the big front page. >> i have spoke on the traders here on the floor about that today. to be honest, i did not hear a lot of concern or worry about that. regardless, tough to find the bulls here today. we are dramatically off of our lows. the dow had been down and the s&p down about half a percent. yo can pin that, traders say, on news out of europe.
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of course, treasury yields, as mr. swe have been talking about if you look at the rate sensitive sectors, that's where you start to see the hurt today. you also have rates there at the lowest in about a month and a half. you have pharma, a sector that a lot of sectors move to for strong yields. home builders, another sector to look at, hurting as mortgage rates rise. rates have risen significantly in the past four weeks. the u.s. home construction etf having its worst day in about six weeks. we will end on a bright note. we did have the fdic. here was the headline saying bank income in the first quarter hit an all time high. you can see the banks bucking the trend and in the green here today. mandy, back to you. >> you are absolutely right. rick santelli is over on the beat. we saw the ten-year yield get up
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to 2.23%. how are we doing now? >> you saved about nine basis points off of that. i almost find it more fascinating that since may 1, which is the second day of the two-day fed meeting we had employment data and at that time it was around 162, 163. going back to april of 2012, which may be a negative sign as we have been talking about for funding of mortgages. it will correlate to the stee n steepening curve. one other issue, when we're all trying to look at interest rates, i keep coming back to this lumber chart. lumber has lost 30% of its value. and i think we need to think about why that is. is it bubbles created by the fed and i will kidliquidity? lumber is soft. >> all good questions you have thrown out there.
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>> we call the top story the lead and the lead today is the question. the question that everybody is asking is simple. if bond yields continue to rise, will stocks fall. the green is the ten year treasury bowl. stock markets have been all over the place. in the last middle ten years. so the question again, if bond yields rise more than they are now, let us ask someone who should know. that is bill gross. it is a simple question that is roughly valued at a trillion dollars. what say you?
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what's going to happen? >> let me answer it by going to your chart, brian. what your chart really shows is the history of inflation. double digit inflation in the early 80s. right now central banks are responding with excessive ease. to answer your question on the chart, the normal bond yield for the next few years should be the yield that existed for 100 years until the mid 1970s, somewhere between 2 and 3%. >> between 2 and 3% that you just highlighted, can stocks still rise? at what point does the yield have to get to to ease into stocks? does that depend on what's goij on? >> another good question, we talked about this this morning.
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you know, the correlation between stocks and bonds up until 2008, blaming quantitative easing was a negative one where bond prices went down, stock prices went up as a reflection of real growth until the point where it got squeezed. since 2008, with quantitative easing. rick would probably agree with this going forward. a mild positive correlation. it's simply because the global levered trade, you know, it depends upon a stable japanese yen and a stable jgb yield and a stable treasury yield. >> okay. so i promised our viewers, bill, a 100-year look on yields.
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it's a very simple question. i only look back at 30 years. i could say that today's rates are abnormally unhistorically low. if we extend the chart out, you could see that maybe 2-5% range is not abnormal. my question in, is this the anoma anomaly? or was 1980 the anomaly? is this sustainable? is today an anomaly on the other side? on the downside? inflation is, perhaps abnormally low. the bond bull market was over. but yet, and certainly we are
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seeing that in the past few weeks. we think that treasury yields, the ten-yield as rick mentioned, that there is stability there based upon continued check writing by the federal reserve and by the bank of japan. it's a big push. >> is it possible or too much of a stretch to ask is it possible that they are all basically acting now exactly as bernanke hoped? last week he was talking about the tapering and now we're starting to see the adjustment in the market so that we don't get a massive dislocation, a bad adjustment when the actual tapering occurs. >> i think there is something to that. he did in questions and answers suggest that in the next few meetings there was the potential for a tapering if employment continued to improve.
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president rosengren suggested there there would need to be two or three more months. chairman bernanke does not want a 40 to 50% basis increase. when you add that to the mix, those two are a dangerous potent k combination. >> i take a different tact and i have a question for you. has he lost control? the bond vigilantes are on the back burner now. you can't fight the fed. do you think the bond vigilantes will be able to move the market?
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>> well, to answer your first point about lose iing as a matt of fact, they never had it. and to the extent that low interest rates reduce savings and therefore reduce consumpt n consumption. to the extent that they destroyed business models and technically, sort of jam up the repo market, they sort of lost control. i think they are down the list. first of all the fed and the boj and others, they write trillions of treasuries. what a competitive company would do, skinny up the margin. you know, the vigilantes can be vigilant and hopefully they are and will be but it's up to the central banks in terms of tapering or not tapering. >> how much is a communication
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problem? the whole new, it means there are a million voices coming to the point where the market is kind of confused. >> i think they are. and perhaps as you pointed out, that is part of the plan, so to speak, to confuse investors so that yields gradually move higher. i just think they have confused markets too substantially, so to speak. we are basically operating in unfettered territory in terms of where the fed is going with tapering and where the boj is going in terms of its buying and policy responses going into the next few years. there is a point going forward in the next few weeks and months where banks need to take control and reduce volatility. >> very quickly, come january next year, who do you think could do a better job than bernanke? >> bill gross?
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>> goodness, no. >> mohamed? tony -- >> certainly mohamed, but he is well placed in newport beach. i would suggest that bernanke has a chance to succeed himself and there are likely successors. i would like to see a fed chairman that begins to place an emphasis on savings and savers as opposed to wall street and borrowers. any candidate that fulfills that potential would be a good candidate. >> i think ups is putting a 20% stake. >> thank you so much. >> you're welcome. >> tim cook says he has got a couple of game changers up his sleeve but what would you want apple to create next? a watch? maybe a car? how about a housekeeper robot like rosie from the jetsons. >> you can tweet us. and we will be digging into china's sweet and sour deal.
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latest headlines, nokia has now lost its lead but the place it lost it is its home country of finland. nokia stock is actually up 22%
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over the past year. >> and apple still has a couple of game changers up his sleeve. what is it? no one actually knows. he really didn't make a ton of news but we're all talking about it. >> look no farther than the two-year stock. things have not been completely smooth over the last bit of time. tim cook said -- take a listen. >> look at it. i don't have my head stuck in the sand. but for us, winning has never been about making the most. that has never been the corner stone of apple. >> not making the most units, but clearly they do like making the most profit when they can.
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that's another thing they have up their sleeve. but he also talked about wearable technology. didn't like the glasses. likes the wrist a bit better. listen to how he thinks about apple placing something on your wrist. >> i think for something to work here you first have to convince people that it's so incredible that they want to wear it. where you two guys are wearing watches. if we had a room full of 10 to 20-year-olds and we said everybody stand up that has a watch on, i'm not sure anybody would stand up. i don't see it. >> he talked about phones, opened up the possibility of multiple new versions of the iphone, not just the one. talked about apple tv. used a lot of the same language
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he has used in the past. leads me to believe maybe the tv is coming sooner rather than latter. >> indeed you will. thank you very much for that sort of question. what should apple be making next? maybe a smart car that syncs up all of your gadgets, or maybe just buy tesla or go into watches. tim cook didn't seem jazzed about that. what about a personal assistant? or a housekeeper like rosie the robot on the jetsons. we want to hear what you think apple should make next. shoot us a tweet. also joining us with his take, you notice we say what should apple reveal next. what should they reveal to change the game again? >> to change the game? i think we could go into cars.
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we saw something that would allow you to use it to unlock your car. >> i don't think we will see an apple car. why isn't apple getting in on that game in the living room? >> it's a $99 box. why build a $2,000 tv? the reason remote control was invented is because people didn't want to stand up and change the channel. now we're talking about swiping your tv? >> let's go back to technology. i wear watches because you called me out for not wearing one. >> i gave mine to the arrested development guy on cnbc and he still has not given it back. >> to what degree would it have mass appeal? >> apple could perfect it.
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there was a smart phone market and apple made it huge and the same thing with tablets. microsoft tried plenty of times. we could see them change existing industries or create new industries. >> how about create a phone that has a battery that lasts longer than seven hours and a map that will not send you into a lake. we are seeing apple and samsung phones. why doesn't apple perfect what is more than half of their revenue? phones. >> i think that is what we will see. software focused conference. i think we will see tie ins. bring them together. >> i tell you what would be a
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game changer. an announcement regarding china. that's where a cheap iphone could come into play. >> let's bring in some of the twitter responses from some of our viewers. all kinds of applications. a time machine so they can go back in time when they made the quote best products. return to sender function for spam and a really cool trading platform. lots of other responses. >> and we're going to have to wait and see what the lead designer does with android. he is making me nervous about how they will completely simplify their screen. one thing that ios does better, android has the boxy look. the microsoft software is the most sleek. fonts are smooth. >> and that is considered flat. >> are you worried about it?
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>> johnny has proven his success in hardware before. we need products. we have seen drafts that show that their stock is dropping. >> great announcements, right? >> should have a movie with will smith. >> great idea. >> could the street's most super charged stock finally be running out of juice? >> and a fascinating look at who is really bringing home the bacon for america's families. we went out and asked people a simple question: how old is the oldest person you've known? we gave people a sticker and had them show us. we learned a lot of us have known someone who's lived well into their 90s. and that's a great thing. but even though we're living longer, one thing that hasn't changed: the official retirement age. ♪ the question is how do you make sure you have the money you need to enjoy all of these years. ♪ to enjoy all of these years. i've always kept my eye on her...
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>> welcome back to street signs. want to point your attention to shares of pinnacle entertainment. sec is challenging their acquisition of rival casino operator. it is alleged that it would lead to higher prices and lower quality for customers in specific geographic regions. both stocks are lower on the day. >> you have got to get off of facebook and head out west. cheryl sandburg wrapped up her
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talk. julia joins us now. >> reporter: well, there was quite a bit of talk about sheryl sandburg's talk, but the real focus were on the business of face book and how it is making more money on mobile inparticular. take a listen. >> how do you split your roles? >> look, i report to him. everything reports to him. the question is what does he spend more of his time on and what do i spend more of my time on. we are very naturally split. he is product and engineering and design. what he really wants to do is be in the office in his conference room with product teams reviewing products. that's what he loves to do. >> so what do you do? >> i help run the company. i run the sales team and the deal teams and the marketing and help build the business side of
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the business. >> now as the question of whether one of zukkerberg's new products, facebook home, has been a disappointment, sandberg said it will be a long road and they believe we are on the path to make phones more social. they do consider it very early. as to the business opportunity, sandberg said it's a better opportunity than the desktop. facebook has one in seven minutes on the desktop and one in five on mobile devices. she said we are a mass media and a very targeted one. we have a super bowl every single day. she cited the example of samsung launching on facebook and the return on investment was nearly 13 times. sandburg says they have to pry
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ortize and while an ad network is a good idea for facebook, it's not a goal right now. as for search, she said they are continuing to tweak search and make it easier to find things. there is nothing to announce. she dismissed concerns that facebook is losing its cool with teens. she said they are spending time doing other things and still returning to facebook every day. >> thank you. fantastic reporting. coming up next, bearish on bonds. street signs delivers one stock that you might want to check out. >> exit's also an etf. and china wants to buy america's biggest hog producer. tails are being straightened out. but can a deal like this even get done? remember on friday we showed you the cronut? the thing that new york has gone insane over? there are black market cronuts going for 40 bucks. >> yeah, it has become a thing. a cronut thing.
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>> bottom of the hour, half way through the show, so it must be street talk time. this is a segment sweeter than a cronut. let's start off with this. why would you want one of these etfs? >> we usually talk about stocks. if you have a bearish view for bonds, i'm not saying buy this but this is one you can use to invert the 7 to 10 year treasury bond. if you think bonds are going to go down, you can buy this one or invert it. it's a little expensive. volume is not that heavy. but looking for a way to short the bond market without shorting the bond market because that's hard. >> we have also got a big merger in the funeral home industry. >> acquiring stewart enterprise.
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share in cash. service corps was a $3 stock. kind of shows you the irrationalties right? >> yeah. >> like nobody was ever going to die again. every company was sold willy-nilly. it's got an industry that is reasonably protected. >> it's per fengt. it's a perfect business model, let's be honest. i said it. this is a massachusetts pharmaceutical. >> it's up 13%, mandy. raising their target 90 bucks from 54. that is a big jump. raised the target from 77 to 65. kind of under the radar. a huge move over the last year. >> incredible.
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>> hard money segment. the gold bugs. we're up 13 bucks an ounce. just under 1% silver also making a slight rebound. aluminum is up. palladium and copper are down. >> women are the breadwinners in more and more american households. when you think about it it's not a huge surprise but the data is really revealing.
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>> it's very revealing and two tales to tell. data from the research center in washington shows that mothers are, indeed, the primary breadwinners in four in ten households with children. the majority of these women are single mothers and they earn about $23,000 a year, well below the national median and hugging the poverty line. the others are married women who earn more than their spousessome those women earn an average of $80,000 a year. women make up nearly half the u.s. work force today and the percentage of married women is nearly twice the percentage that it was years ago. overall women are still earning. only 82% of what men do. as more women achieved higher levels of education, earning potential increases according to
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hughes and parker. >> you have got a whole population of married women out there who are as educated or better educated than their husbands and that explains why we have seen the growth in the share of wives who make more money than their husbands. >> nearly one quarter of married women outearn their husbands. before the kids ask dad for the increase in the allowance, they perhaps should reconsider because more and more it's mom who is bringing home the bacon. >> thank you very much for that. you actually brought up an amazing study rktstudy, right? >> basically it was on why women who have advanced degrees are less likely to be full-time in the work force than those without. i tweeted out the study. i'm sure a lot of our viewers know this. a lot of women i know in my town who are not working by choice
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because unfortunately because the only options corporate america gives them is you have got to work 70 hours a week and both parents cannot work 70 hours a week. unless you want to have three nannies. it's the way it is. until corporate america wises up, they will lose all of this intellectual capital because they don't make it easy. it doesn't have to be easy. it can be dads, you know? the higher the degree, i called it the paradox of the advanced degree. the higher the degree, the less likely they will be in the work force. >> you can say maybe those women with a higher degree are maybe married or or in a long term relationship with a guy who has also got a higher degree who may also be working a billion hours a week and one of you has to say beth of us can't be there or they don't need to work. >> and we have got to go.
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corporate america needs to get rid of the machoness of who can be in the office long enough. >> in a perfect world. >> i would be a unicorn. still ahead. china going hog wild on one iconic u.s. brand. >> and a really delicious duo. bacon and a costly cronut. street signs back in a flash. [ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just to stay alive... but feel alive. the c-class is no exception.
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>> announcing plans to buy virginia based pork producer smithfield foods for $4.7 billion in cash. if approved it would be the largest chinese takeover of any american company. i tweeted out but i did not think the deal would go through. i hear you are hearing otherwise. what are you hearing? >> we are not hearing a whole lot of opposition. that partly might be because congress is out of session and members are out of town.
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but they only review it with a national security lens. they are not necessarily looking for appropriateness or anything else. the experts tell me that this thing is unlikely to be objected to. there is not a whole lot of national security at stake here. i even talked to the union. they say they are taking a wait and see at constitute on this. they are optimistic about exports. so a lot of cautious optimism on here. >> i believe there would be outrage. >> hog wild, how about sweet deal for investors, sour deal for america?
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>> this company that is buying smith field in china was involved in one of the many -- there is a thing called a steroid performance enhancing substance used to pump up their pigs like lance armstrong. the big thing that we have to understand is that china is a little different. they imsupport. -- important. frankly china has a track record when they come into countries like canada or the u.s. the big picture is this is part of the buying of america. thaw bought -- >> 6.5. >> this will be another banner year. >> let's just tackle the objections one by one.
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chinese style, practices and foot safety practices. >> pete ser right. a terrible food record. that government has determined they want to do to agriculture what they did to manufacturing, which is to modernize it. they're not buying pigs with smithfield, they're buying know-how. they want their food supply chain to be better. and so with this deal, they get that knowledge to help them improve their country. the ceo of smithfields did a conference call with investors today and he was at pains to refute all the things that peter was saying. this is not about importing chinese practices into the u.s., this is about exporting u.s. practices to china. >> i want to bring -- guys, hold on for a second, because i want to bring in the mayor of smithfield, virginia. his anatomy is t. carter williams and he joins us now. i know smithfield well, mayor.
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thank you for joining us. i'm a virginia tech hoaky. you have a small town there, with about 8,000 people. a company my dad works for does a lot of business with you guys. what is the reaction in smithfield, virginia, to this news today? >> i, myself, along with everybody else was caught completely by surprise. just sort of spellbound. we had no idea this was coming down the pike. and a small town of 8,000 like we are, you know about everybody's business and everybody knows about your business. so this was a complete surprise. it really was. >> mayor, are you concerned about jobs? >> no, i'm the not, not at all. i talked to one of the vice presidents at smithfield foods this morning and he was upbeat about it. he says this is a very big win-win for smithfield foods and it's also a big win-win for the little old town of smithfield. and i guess at this point, we're looking forward to them having some new people in town. >> did you have any concerns prior to speaking with that executive from smithfield foods? and did that particular executive alleviate any concerns that you might have had?
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>> yes, he did, actually. any time a company is sold, i don't care where it is, you always have concerns with the local employees that's working there. you always wonder how much longer i'm going to be here. and i think that was the concern about a lot of the employees that worked for smithfield foods. and my wife works there, and the first thing she says was, my goodness, we had no idea. and they were really, really surprised. and as the days go on, they're feeling a whole lot more comfortable. now there's smiles instead of kind of frowns like they had this morning. this afternoon, i think everybody's a lot more comfortable with it. >> do you feel like, mayor, because i know that smithfield had some debt, right? they had done a deal with a chinese company a couple of years ago to inject some cash. do you feel like the future of smithfield foods is more secure? >> i really can't answer that. i don't know. i don't get into the working parts of smithfield foods. we're there for them anytime they need help.
quote
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i visit with the ceo about every two months and say anything you need, we're right here for you. we'll help you anyway we can. >> t. carter williams, mayor of smithfield, virginia. mayor, thank you very much for joining us. good to hear a virginia accent. >> it's a fantastic accent! michelle, listen, you and i sort of talked before the show indian. i hear your point about technology. do you think this deal will go through? >> yeah, i think -- i don't think you're going to find any concerns based on national security. if you want to try to connect food safety to national security -- >> what's more secure than food? >> that's the one point where maybe you could do it. but i don't believe that there's any real national security -- >> and eamon javers, if there were any food safety concerns, that would be the agriculture department's area, wouldn't it be? and they don't have the ability to block this deal. >> that's right, it would be the fda, and i talked to the fda a little while ago, and they say they don't even have any process whereby they could step in and block any kind of corporate acquisition as one company to another. they don't even view it as their
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place to even comment on this deal. the fda is focused entirely on the regulation after the fact. so you imagine they'll be doing that in this case. but there's no process by which they could object, you know, up-front. >> peter, can i ask -- let me ask you this. i was going to make this point. if for some reason this deal were prohibited by the u.s. arm of the u.s. government, do you know what would happen to all of the takeover premiums in the united states. it would go away. you want to deny shareholders in america all that money? >> michelle, this deal is going through. i mean, there's no national security implications. but let me just say this as a cautionary note. every time china has come in and bought a u.s. company, they always say they're going to keep things here, and then many times, they don't. >> give me an example. like what? >> the helicopter king, bought a helicopter company in texas, said he was going to keep everything, keep the manufacturing here, within a year, it was gone. >> but maybe there would be lots of examples, michelle, and this is your bait where that does not
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happen. >> we were focused on international vitamin corporation here in new jersey, they've poured hundreds of millions of dollars for the same reason that this company in china wants to buy smithfield. they want to produce made in the usa, because when they do made in the usa and sell it at china, it sells at a premium because people trust the food made here. >> exactly. exactly. so he's re's my concern, michel. 15 million hogs a year is what smithfield produces, they process about 27 million. they get more money from the hog over there it is over here. >> exactly. so that's good for hog farmers of iowa! >> and who's it not good for? the hog buyer in iowa. the mom in the supermarket, the dad that's buying the jimmy dean sausage links. because if they export a lot of those hogs, the price will go way up, and the risk is not safety wise, it's more of a cost issue. if all those hogs are exports, pork, can delicious pork, which goes in 72% of what i eat every day, the prices are going to soar. >> so if you want to prohibit that deal, you're going to choose winners and losers, right? you're going to choose consumers
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in the united states versus producers who employ thousands and thousands of people here in the united states, right? do you want to be in that role? >> i would have said exporting more is a good thing. >> hey, guys? >> real quick. >> one real quick point that michelle raises, which is the fda and other u.s. regulatory agencies are now more and more having to regulate chinese-owned companies. and we've seen the s.e.c. wrestling with this and regulating chinese-owned intent 'tis. you're now seeing the reach of american regulators into china in a weird way that a lot of us haven't really foreseen and the implications of that are going to be drawn out. >> lots of angles to this story and everybody has their own opinion, but great debate, guys. eamon, michelle, peter, thank you very much. >> thank you. up next, black market cronut. ♪
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to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪ well, speaking of pork products, check this out. it's 23 karat gold bacon. manhattan's baconery is selling a set of the gold-dusted chocolate-covered treat, and it is yours, dear viewer, for only $40. and you saw it here just last week. the cronut. people are now scalp the delectable sweet treat on craigslist list for up to eight times the $5 retail price. the scalped pastries are going for 40 bucks a pop. another sign of the apocalypse, both those stories. thanks for watching "street
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signs." i want to give a shout-out to my good friends from my daughter's school who came in and gave us a nice money for a charity auction. this is what they get, an appearance on "street signs." your money is not well spent, my friends -- kidding. thanks for coming up to hightown, new jersey. "closing bell" is coming up next. hi, everybody. we enter the final stretch. welcome to the "closing bell." i'm maria bartiromo at the new york stock exchange. we are off of the lows of the day. that's the good news, bill. >> yes. i'm bill griffeth. a market fighting back from a deep sell-off. we were down 180 points on the low of the day. we're down 100 points right now. and what's interesting, a lot of the intrasensitive stocks are lower today. a lot of people wondering whether this rise in yields in the treasury curve means that they're selling bonds finally to buy stocks. we'll talk about that, coming up. >> we'll talk about that and whether or not 2% is enough of a yield to actually get t

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