>> cool. >> thank you so much for joining us today. the markets, well, you know, we're actually doing better considering we've had a bad streak recently. as you can see, we're moving up by 32 points on the dow, inching further away from the 15,000 mark. it was looking precarious there for a moment. >> take care, everybody. see you tomorrow. hi, everybody. we enter the final stretch. welcome to the "closing bell." i'm maria bartiromo with the new york stock exchange the market trying to break the losing streak. >> yes, looking good so far. a lot coming up over the next couple of hours, including more on what is going on with the government and jpmorgan chase and its ceo jamie dimon, yet another probe has been announced. i mean, i think there's, like, four of them out there in various parts of their business. >> four agencies. >> four agencies have announced probes into this bank, and now, noted bank analyst dick bove

feels the end game may be the government is trying to break up jpmorgan and the culture created by jamie dimon. we'll talk about it, dick coming along. a great conversation. >> always great guest. also, two very special exclusives coming at you. cyprus ceo founder t.j. rodgers is with us. he penned "targeting the wealthy kills jobs." and also the head of the chicago mercantile exchange, terry duffy, getting his take on the soft stock market, the fed, bank regulations and a lot more coming up. >> so many moving parts and pieces. we'll get terry's take on that. and the new buzzword in silicon valley. wearable tech. i mean, there's google glass. and now, apple appears to be gearing up to make a big push into this area based on some new key hires that they have made. but some are doubting that people will actually wear wearable -- would you wear -- how about google glass? >> i think for me, i feel like it might be too much going on.

>> i agree. that, or the smartwatch. not many people wear watches anymore to begin with, right? >> i know. it's true. >> we have a lot coming up on that, taking a closer look at wearable tech on today's program. >> really interesting. let's check where we stand in the final hour as we approach the final stretch of the dow jones industrials average, up pretty steady the last hour or so. up about 36 points, about .25% higher. the nasdaq higher today, big move in technology, one of the big movers, up almost 1%, 29 points higher, and the s&p, looking at gains there, about 10.25 on the standard & poor's. bob pisani, how is it looking as we enter the final hour? >> not bad. by the way, bill, i wear watches. look, here's my watch from detroit. >> me, too. >> i love it. a great watch. >> yeah, how old are you, bob? we all have watches, too. okay? >> okay, all right. >> ask the intern. >> i did try the google glasses,

though, whether they were down here. the google guys. you're right, maria, an awful lot going on. that one i'm having a hard time getting used to. i love my shinola. crummy 6% gain in the s&p 500. it's the best day since august 1st, believe it or not. that's how tough things have been. the emerging markets are a little calmer today. that may be helping stocks and bonds, up here in the united states. a little bit of flight to safety. it is again light volume. bear that in mind. we'll get more news flow, thank you, tomorrow, the home sales and fomc minutes will be out. people keep asking me, should i get out of emerging markets? can i point out, attempts at bottoming in china and brazil, over a month ago. china is up this month. brazil is up. and a lot of economic flow news out of china that's notably better. a lot of internet stuff playing around. sign is a big one, internet stock. that's been up notably. even in brazil, i know it's been

tough on the emerging market front, tough with commodities, but companies like gerdal, a huge steel company, coming off the bottom there. there's been temps to buy the bottom here. that's been over a month now. here in the united states, while we're generally to the upside, there's a group of industrials, big global industrials that haven't gone anywhere today, you going ge. former parent. these stocks have big exposure overseas, showing some of the concerns that exist. here amongst the retailers, of course, great numbers overall, a huge surprise out of best buy. penney was good. tjx was good. home depot was terrific. i had concerns about that, whether there would be enough orders for the big-ticket items, but the orders were tremendous there. i think there were concerns the margins weren't as strong. but that stock, remember, up 80% since 2012. that's the big, big play on the overall improvement, home improvement area. and so far, it's been working terrific. back to you.

>> it really has been. thank you so much, bob. we want to get into the "closing bell exchange" and talk about that and the market. tom is with us, and bill stone from pnc asset management, vince and our own rick. >> how many of you are wearing watches? raise the watch hand. anybody? >> everybody here. >> it's not a technology watch. >> that's the thing. people look at the iphones now for the time. good to have everybody. thank you so much for joining us, gentlemen. what's your take on the markets going into the fall? do you want to be putting your money to work here? >> bill stone? >> oh, i'm sorry. yes, i'm sorry. i think you should. i think you take the opportunities that the market gives you, you know, in the midst of some worries, not today necessarily, but in the worries about the taper. at the end of the day, we say if they taper it's because things are getting better. frankly, i come to the point where i say, well, it's kind of like i got this, you know,

band-aid on, i want you to rip it off and let's get to the taper already. and i think that actually once we feel the results, which i don't think will be much, it sets up the market to go higher. >> yeah, just depends on how much the wound has healed under that bandage when that he take that off. tom carston, you are expecting a pullback. but you're still bullish in this market, aren't you? >> we are, yeah. i think that we have to acknowledge that the economy is in a recovery. the growth we've seen in the u.s. and really around the world has not been as robust as we'd like to see. but we still think that the market is fairly valued right now. and we think that -- we are due for a pullback. there's a lot of uncertainty with fed action upcoming in september. that's been all across the news. and with rising yields on bonds, you have to think at some point, a lot of the cash that's been coming in to buy when the market pulls back at a 5% to 7% level, and kind of buoys it up, at some point bonds do look a little more attractive to some investors, and there's a lack of that cash flowing in to stocks and creates a little bit more of a pullback.

but overall, we think if you're selective, there are good values right now, still in the market in individual stocks and sectors. and so, we're taking advantage of that as we place money for clients into those specific areas. >> but do you think we will see that great rotation, that the money that came out of the bond market will, in fact, eventually find a home in stocks? that would be a driver for stocks, right? >> yeah, it certainly would. you know, that was a -- a comment, in a discussion we had in our investment committee meeting this morning, what's the income replacer for bonds? you have a large portion of the population that's coming in to retirement, looking forward to retirement, and they need income from that. so more and more, i think they start to look to the equity markets for some of that income, and where does that money go? but certainly, that's going to be a longer-term tread, we see, that it will be a bear market for bonds and that cash is going to ultimately flow somewhere, and i think that that's most likely going to be into equities. >> rick santelli, i want to ask

you, a lot of the analysts have come through here are very bullish on the dollar. they figure if the fed's going to start tapering, rates are going up, the dollar will have to go up at the same time. but yet the dollar index is down almost 5% since its peak in early july. what's going on there? >> man, you hit it. that, to me, is the area you want to focus on. now listen, we all know that the dollar index is majorly euro centric, so when you look at the lira or the rupee, yes, they are going down dramatically against the dollar. but those don't really impact the dollar index. this animal is between the dollar and the european currencies like the pound and specifically the euro. and if you look at a chart, you can see that bill's referring to that significant bottom after those twin peaks of volatili volatility -- >> right. >> -- and that prices around 80.50 to 80.60. we're a third of a cent away. bill, i can try to explain to you why it's so

counterintuitive, but what i've learned over the years is sometimes you just have to look at what the market's telling you and let the fundamentals fall in live, but don't get stuck with the conventional wisdom, because this is a very, very nasty-looking chart potentially. >> what about emerging markets, guys? what's your take on emerging markets right here given the fact that these outflows have persisted? >> how about vince lowery on that? >> well, i think in terms of the emerging markets, maria, you know, we look at things on valuations, and we believe the valuations in emerging markets are developing and is very, very strong now. particularly brazil, china, chile. all of these emerging markets are developing real value. you know, last year at this time nobody believed in europe. and all of the developed countries -- japan was a big surprise. we had germany. we had france. we had all of the developed countries out of europe, when everybody thought europe was dead, they rose, and they rose dramatically. the u.s. had a good year. the u.s. was trading -- over the

last 20 years, in noninflationary market -- the u.s. generally trades about $1.50, $1.50 for every dollar in capitalization. that's right where we are right now. the market is right where it should be. the real values are in emerging markets. i'll tell you a couple of problems developing that i see that creates headwinds. is that over the last two years, we've only -- we've only grown revenues in the s&p 500 by 1.8% a year. the historical average is between 5% and 6%. the real problem isn't about tapering. the real problem is why is the interest rates -- why are bond yields so low? they're half of the historical level, roughly a little over 3% across the curb. it's usually around 6%. this market can absorb higher rates. the problem is that rates are -- are down, because there's no growth in the market. and i believe -- and i'll just say one thing why i think this is. you know, ronald reagan did a couple of things in 1980, '81

that generated the baby boom, and that was he cut interest rates, he reduced restrictions on businesses, but more importantly, he was one of the greatest cheerleaders this country ever had, and we have all -- and in those three areas, generated the last great economic expansion, all of the opposite's happening in washington right now, and that's why we're not getting growth in this country. and that's why we're not getting growth anywhere. you can get valuation in the emerging markets. >> got it. bill stone, what do you expect the fed minutes to show tomorrow? is that a potential market mover, or is it a snoozer, do you think? >> you know, i think it's a potential market mover. i think, you know, everyone, including myself, is going to be trying to figure out, you know, whether there's some clue in there around the timing of the taper. i think that's really probably people pay more attention to that than jackson hole now, because you really don't have the big players, at least speaking, even, or even there, and i think at the end of the day what it will say to you is you'll have to watch the data to

know when they'll taper. >> do you think they would actually discuss a potential timetable for when they would plan to taper, and would that show up tomorrow? >> i don't think they're going to say a specific time -- >> i don't personally think they will, no. >> -- parse for clues. >> okay. vince, what were you going to say, quickly? >> no, i don't think they'll show their hand. i don't think ben bernanke -- >> okay. >> -- has any intention of tapering at this point in time. he's going to turn that over to someone else. >> really? >> there's no reason for him to push for tapering at this time. the markets are too weak. interest rates are telling you that the global economy is slow. and there's a reason for that, and that -- tapering is not in the cards right now. >> yeah. >> and i believe the tapering doesn't matter at all. >> thanks, everybody. really appreciate your time today. we'll see you soon. >> thank you. >> thanks. heading toward the close, about 50 minutes left in the trading session. yes, we're trying to break the three-day losing streak for the industrials. i guess four days, wasn't it? how time flies, as it says on my watch here, that i wear on my wrist. [ laughter ] up 39 points on the dow jones

industrials. up next, another day, another investigation. what is the government's end game with jpmorgan and jamie dimon? a series of charges and probes against the bank, and its employees, dick says he thinks the administration wants the bank broken up. he's here next. and shares of ibm hitting new low, 52-week low, second day in a row. is this a buying opportunity or sign of long-term trouble on the horizon for big blue? what's wrong with big blue these days? coming up. and terry duffy, chairman of the cme group, will join me as the special co-host of the hour. we'll get his take on the regulation and the fed. and he'll tell us about the one trade that changed his life. that and a lot more coming up. stay with us. (announcer) at scottrade, our clients trade and invest

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all right. here's the story. jpmorgan back in the spotlight for, i don't know, in the cross hairs of the government -- >> yes, probably it. >> it would seem be the case. last week, as we know, two employees were indicted on matters related to the london whale trade. then, it was the firm's hiring practices in china, and whether bribery was taking place in exchange for hiring the children of powerful people there. now, it's the company's energy

trades, the justice department is investigating whether any manipulation took place in that regard. >> let's not forget, this all comes after jpmorgan has already agreed to pay more than $400 million to settle allegations raised by the federal energy regulatory commission that the bank manipulated energy markets in california and the midwest. dick bove of rafferty capital markets is connecting the dots today, and he said this is the government's effort to break up jpmorgan. he joins us along with dan levy, former assistant u.s. attorney for the southern district of new york, he just left his post. he will join nicole smith's new york office in september and also joining the conversation is our own jeff cox. good to see everybody. thank you for joining us. >> thank you for having me. >> got to kick this off with you. you've written so much about this and have been talking to so many people about it. you think the government is just trying to break up this company. so add as much pressure in all different areas to get them to succumb to a breakup. >> yeah, i don't think there's any question about it.

i think there's no doubt about it. i think it is the policy of the united states as articulated not just by the president, by the congress, by a number of fed governors, by the presidents of some of the district fed operations, that the too big to fail situation is not tenable, and that we've got to get rid of it in this country. in addition to which we've got any number of sets of regulations that are coming out, basil 3, the leverage ratio, the liquidity ratio, geared to the same thing -- break up the banks, get them smaller, get them out of the place where they could be a systemic risk to the system. the net effect is we have eight agencies of the government supposedly six lawsuits coming out of the justice department, supposedly the justice department talking to places like the southern district of new york and the attorney general of new york, all to sue the bank. it doesn't -- it doesn't make any sense for them to do this in terms of assisting the u.s.

economy, but it does make sense for them to do it if their goal is to break up the bank. >> dan levy, what about that? you just left southern district. you oversee wall street. you have insights presumably. i know you're going to say it's a coincidence. you have to admit the timing of all of the investigations sort of clustering at this time is sort of interesting, isn't it? >> if what the investing public wants to know is why is this happening, why is this confluence of events happening, it is not because there is a grand plan among various regulators and prosecutors to break up or take down any particular bank. it is much more likely the fat -- the function of jpmorgan chase, or other particular banks being money-center banks that operate in dozens of countries with dozens of lines of businesses, and they're being various regulators who look at different parts of banks' businesses. there is no grand plan to take down or break up that bank. >> are they just an easy target

than the others now? are they vulnerable after what they've been through lately with london whale and so forth? >> it's not a question of vulnerability. it's a question of what facts are coming to light and what information do different parts of the government have at any particular time. there is no grand plan. i speak not based on knowledge of these particular investigations, but having been a prosecutor for 11 years. that's simply not how investigations unfold. >> but we all know that they don't want jpmorgan to be so big. i mean, are the benefits of being big slowly being removed as a result of all of these hits? too big to fail. is that the big issue here? would you like to see jpmorgan broken up? >> i have no view about the matter, but i think the point is, who is the "they"? if the they is the government at large, different parts of the government don't necessarily speak to other parts of the government, and coordinate a plan to destroy a particular institution. that is not how -- based on my

experience -- the united states attorney's office for the southern district of new york functions. it simply does not function that way. >> -- just break up, not destroy it. but break it up. >> it doesn't -- >> make it smaller. >> it doesn't -- it doesn't unfold within -- the investigations don't unfold with an eye towards breaking up a particular institution. that's simply not what prosecutors are about. they are about getting to the facts -- >> i just can't believe that that's true. i can't believe that anything that was just said is valid. >> why, dick? >> well, let's look at the most pathetic of all of the actions of the u.s. government, which was this s.e.c. leak to "the new york times" this weekend. you know, why would the s.e.c. go to "the new york times" with what "the new york times" calls the confidential document about, you know, the supposed bribery occurring in china, when we know thousands of firms -- nbc has hired president clinton's daughter. you know, there are thousands of firms in every country of the world that are doing exactly what jpmorgan is accused of doing, and called bribery in china.

if the s.e.c. really believed that this was an inappropriate set of actions, why are they just going after one company in one country when they could go after dozens of companies in dozens of countries? let's look at this more -- more idiotic suit, which was going after the, you know, the bear stearns situation, suing jpmorgan shareholders, because this is not a bunch of companies -- >> well, i think that -- i think that -- >> we haven't forgotten about you, jeff cox. >> thank you. >> let me get dan levy to respond to this, first. >> yeah, what's your response? >> if the investing public wants to know which is the more likely scenario -- a grand plan by various parts of the government to target a particular institution, versus a function of the fact that an institution does business in dozens of countries across the world, has dozens of lines of businesses, and there are dozens of different regulators who look at particular institutions, i am happy for them to figure out -- to choose between one of those two scenarios.

the one i aposited or the one dick aposited a moment ago. >> jeff cox, you've been covering this story. >> i read everything dick writes about this subject. he always raises interesting points. i think just to address this, generally speaking, there's an old saying, one time is an accident, twice is a coincidence, three times is a pattern. i think dan levy's old boss, preet bharara, has made it clear how he feels about jpmorgan, even though he doesn't come out and sometimes name names, that kind of thing. you know, dick's point, though, about everybody does it, i mean, we're all kids once, we tried using that excuse with our mothers and i'll bet it didn't work for any of us. i do think that jpmorgan will have to answer questions. but look, if everybody does it and jpmorgan is being charged for it, or being investigated for it, then i think that you can draw a pretty straight line for, you know, what the intent there is, is somebody coming after jpmorgan?

i think it's clear that this bank, in particular, has drawn the attention of investigators, and as a shareholder in jpmorgan, you've really got to pay attention to that. >> yeah, you really do. dick, let's wrap it up from an investment standpoint at this point. we know these investigations are not going away. this is the new normal. even the federal reserve now in terms of its capital standards might be tightening the screws here, and perhaps putting dividend payments, increases on the back burner for jpmorgan and a lot of others. so what is the investment play here? should we be avoiding this stock? >> this is -- this is a dead-money stock for the short term. i don't think there's any question about this, because the actions of the government will definitely harm this company. it will harm it with its customers. it will harm it with its employees. and it certainly will harm it with its investors. i am not going to pull my buy recommendation on the stock, because i'm so upset at the government. but the fact of the matter is that if you think about it, if the united states government is intent on breaking up this

company, and if the united states government is intent on every week leaking something to some paper somewhere, which is negative about this company, it's going to be very difficult for this stock to do well in the short run. >> all right. gentlemen, thank you. >> thank you so much, guys. >> dick, always good to see you. dan levy, thank you for defending the other side of that trade. appreciate you joining us today. jeff cox, before we let you go, you wrote a story today, as well, about an intern at bank of america in london who died after reporting for work for three straight day -- working three straight days. what can you tell us about that? >> yes, it's a terrible tragedy. this gentleman's name was moritz erhardt, a 21-year-old intern with bank of america in london. we had mentioned about him working three days straight. that's not been officially confirmed, nor has it been denied. it was known he is a hard-working guy who had been putting in a lot of hours, was found in his flat in london. authorities are still investigating it. you know, it just brings up the whole culture of the interns working at these banks and getting put through a lot of

long hours. i had a chance to speak to a senior person at bank of america who told me, look, you know, it's a terrible tragedy, everybody feels bad about it, but this is -- this is what interns go through. they come here to learn how we operate. we want to see how they operate. and, you know, hopefully somebody gets hired when it's all through. but just a terrible, terrible tragedy, getting a lot of readership, posts up now on cnbc.com. >> all right. thank you so much. jeff, we'll check it out. we'll see you later, jeff cox. 35 minutes left in the trading session here. the dow holding steady with a gain of 34 points. breaking a four-day losing streak potentially. meanwhile, ibm going the other way. touching a fresh one-year low today, and the stock is down nearly 15% since it hit a record high back in march. up next, we'll hear from somebody who sees a big buying opportunity in big blue. also, t.j. rodgers says president obama's tax hikes on the rich will hurt the middle class and the poor by killing jobs. it was a controversy -- controversial op ed, and now

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it's time. welcome back. the stocks are trying to snap a four-day losing streak. josh lipton is breaking down the stocks drawing the day. josh. >> reporter: some of the movers on the radar. let's start with what's working. a number of the retailers like best buy. reports and pleases, easily beats wall street's expectations. the stock has been a monster, up more than 180% this year.

urban outfitters also well in the green. the specialty retailer posted earnings that bested expectations. the street reacting, jeffries, rbc, among those raising the price targets. for its part, jcpenney did report sales that continue to fall hard last quarter, but the retailer also did say the back-to-school season has so far been encouraging. companies said sales trends had improved every month in the quarter. we also heard from a dow component, home depot, delivered second quarter earnings that topped expectations, also raised its full-year guidance, although as analysts point out, the company did outline potential headwinds in the second half, also some worry that rising interest rates could stymie the housing recovery. on the other hand, have a look at barnes & noble. tanking. posts a deeper quarterly loss and its founder halts his plan to buy its stores. and we'll end here on ibm. edging higher right now. but it did hit new 52-week low

for the second-straight day. ibm currently having the most negative impact on the dow so far in august. negative impact of some 77 points. big blue now down some 5% just this month. bill, back to you. >> all right, josh, thanks so much. so is this weakness with ibm a buying opportunity, or will it get worse from here? let's talk about it in "talking numbers." with us on the technical side is rich ross, and on the fundamentals side, it's blaze tangerly. good to see you both. rich, this was such a leading stock for so long. what happened, and what do you do about it right now? >> well, i don't know what happened, but i'm going to tell you what you do. you buy the stock here. i'm not going to tell you that it's been a strong stock. it's one of only three dow stocks down on a year-to-date basis. i am going to tell you where the compelling entry point for short-term alpha generation. simply stated, that means the stock's going higher. you see the multiyear trend that we've broken just months ago. but we're testing that critical

support around 185. and if you look at a shorter-term chart, you've seen that each time we've gotten down here over the past year, the stock has rallied sharply. 15%, 16%, 12% in a matter of weeks. i think history repeats itself. you want to be a buyer here ahead of that type of advance. >> all right. blaze, anything worries you fundamentally about the company, or would you buy here? >> i think fundamentally, you know, we put a short sale recommendation on this stock back on july 22nd. the stock was about 195 then. and after we had looked at the quarter, we became very concerned that ibm's back to being revenue challenged, and that sort of lack of revenue growth was a very, very big factor in holding this stock down throughout the whole 2000s, you know, basically from '03 to 2010, the stock couldn't go anywhere. earnings, you know, financial engineering that's going on, buybacks putting the earnings up. you simply don't have the top line.

>> do you have a downside price target? >> you know, the stock has moved down a good wit bit, still off $10 where we said. it has another 10 to the downside. we're looking for the stock to move down to 165, 167. at that price, i think it's fair value and -- >> bill, i don't think we get anywhere near that. keep in mind there's a small omaha based financial concern that has 14% of its assets involved in ibm on the long side. you've retired 34% of the shares outstanding over 10 years, net interest margins have doubled to over 17% over the same so-year period, aggressively shedding costs. i think you have to be a buyer here. >> all right. opposing opinions, that's for sure, on an important company in the dow jones. good to see you both. thank you. >> thank you. 30 minutes before the closing bell sounds. we have a market that's higher. showing a gain of 46 points, moving up the last few minutes. when we come back, oh, boy, a hedge fund fee fight. is the hedge fund industry about to lower its huge fees in order to be more competitive and attract new clients? we'll hear from a top hedge fund

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welcome back. hedge funds known for their hefty returns and their hefty management fees. the term 2-and-20 has been the standard, meaning a flat 2% fee on the total asset value, plus an additional 20% of any profits made. now, the numbers may come down in the face of more competitive pricing. >> yeah, let's talk about that. with us more with what's happening in the hedge fund pricing world is jane buchanan, from pacific alternative asset management company. they have $9 billion under asset management. and our own ron insana, who has worked extensively in the hedge fund industry, as well. jane, welcome. thank you for joining us. i mean, is it as just as simple as econ 101, when there's more competition, it drives prices lower? is that what's going on?

>> that's essentially it. you're exactly right. the other factor that's really affecting it is large institutions are entering, and they're giving larger allocations. so it is econ 101, both in terms of more competition, but also more assets coming in and then able to demand that they get fee discounts. >> yeah, what about performance, ron? isn't that part of it? a lot of the hedge funds have been underperforming just the basic averages as investors go for the indexes and etfs. they'll have to give back, right? >> well, i don't know if they have to, maria. >> they don't have to but -- >> they don't have to. it will be a multitiered process. when you see newer funds come to market, when you see funds without the spectacular returns, there mighting some discounting. it has to be across and available to all investors in a single fund. you can't treat investors differently within a single fund. those, however, who have continuously and have for a long time now put up very good numbers, i don't see -- i don't think you're going to see much fee compression there. the high-priced funds that have put up 15%, 20%, 25% a year for

an extended period of time, i don't think will feel that compelled to give discounts. >> or they find themselves under investigation by the government. >> that's a separate story, yes. >> ron, would we be having this discussion about pricing if market conditions were different, if we hadn't been through a financial debacle for the last five years, and if interest rates were much higher than they are today? i mean, it's tougher to make a buck these days, so you have to lower the bar to bring more people under this tent, right? >> and it's also really tough to raise money right now. having said that, though, you know, i do think that, as i said before, a multitiered process. and where i think the hedge funds of yesteryear will face more competition is not necessarily among themselves, but what they call liquid alternatives, mutual fund alternatives that behave like hedge funds. that could create pricing pressure that the hedge fund industry hasn't to date had to deal with. >> do you think, jane, that these moves will actually make hedge funds more accessible for broader range of people? >> i think it depends.

i mean, clearly, you're seeing the retailization of hedge funds. but you have to be careful about the fees involved. taking an institutional count of $200 million, the cost of acquiring and servicing that account are substantially less than small accounts. so i think the small investor needs to be very careful about the distribution fees and the other costs affiliated with it. >> and do they take fewer risks? i mean, hedge funds are known for taking their risks so they can get the bigger gains. if they're bringing in the smaller guy, presumably -- i don't know, do they take fewer risks? what do you think, jane? >> it's a different risk-return tradeoff. in the fourth quarter, the market was down 40 basis points by the s&p 500, but hedge funds were up 200 basis points. so they moved in a different direction. so far this quarter to date, the market's up 330 plus a little bit more today, and hedge funds are only 60 basis points. so it's a different return tradeoff, and that's the way i like to think about it. >> yeah, i think also we should

be focused on net of fees. i think it makes a real big difference with respect to how much a fund can charge when their net returns have been consistently high. we always look at the gross. we look at the 2-plus-20, the 3-plus-30, but nobody looks at the 4% load and underperform the s&p. that's an area for retail investors to get involved and in some instances could get better results if they have access, but can't get in because they're not accredited or qualified investors. >> everybody is getting poked in some way or another because of the etf industry, as well, because the etfs are coming, taking market share from mutual fund, mutual fund taking market share from hedge fund. there has to be pressure to take fees down. >> jane? >> yes. no, i wouldn't general -- i wouldn't agree with that. you have to be careful about the expense versus fee arbitrage. be careful they're not burying fees below the next layer.

you want the all-in cost. for retail individuals, if there's a sales load, you want to be aware of that. >> all right. we'll leave it there. great to have you on the program. >> thank you both. see you later, ron. so from high fees to a different kind of high. [ laughter ] a warning about stock scams involving marijuana-related companies. mary thompson has the -- she's the lucky reporter with this story. mary? >> reporter: well, bill, mary jane thompson, if we have to be named. so named. i don't think my parents had this that in mind in 1963. they want investors to be on high alert for stock scams linked to medical marijuana, fearing investing in the scams will prove to be a downer. here's why. using texts, e-mails, they make outlandish claims about the power of pot, about the ability to cure the common cold and the potential of them with a toke hold in the budding marijuana industry. the aim?

pump up shares of the companies and then dump them, leaving duped investors holding the bag. it's no laughing matter. jerry walsh says when there is a next new thing, you see fraudsters swarming like vultures to get in on the action. with 2.4 million current users, the medical marijuana industry is seen hitting $1.5 billion this year and quadrupling in the next five, and making it the next new thing for scam artists. while the industry is home to perfectly legal firms, they remind investors not to buy into half-baked investment ideas. many of the companies are in the development stage. their stocks are thinly traded and the companies have little revenue and few, if any, profits. if they do want to reap an ounce of profit, investors need to weed out what firms have a real business, and which ones may just be blowing smoke. bill, back to you. >> so to speak. i think it's amazing how prescient your parents were with

your name. >> i know. isn't it amazing? >> great stuff. thank you, mary jane. >> thanks, mary. heading toward the close. i don't know. if you bought into any of the marijuana scams, i'd want to know what you were smoking, right? >> that's a good one. >> thank you. >> you have a lot of good ones. >> i've been waiting all day to tell that one. >> a good one. >> as our staff knows. we have 17 minutes left here. the dow is up 29 points. so it looks like we could break the four-day losing streak. the emerging markets may have to be renamed, re-emerging markets. up next, michelle has the latest on an area of investing, changing by the day. and after the bell, from sweatsuits to smartwatches, to wearable glasses. wearable technology is booting up and apple is making hires to help, but the question is, will people wear wearable technology? >> i don't think so. >> back in a moment. creating new opportunities for those who stand ready to seize them. in a time when the biggest risk is playing it safe,

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so you want to drive more safely? of smart. stop eating. take deep breaths. avoid bad weather. [ whispers ] get eight hours. ♪ [ shouts over music ] turn it down! and, of course, talk to farmers. hi. hi. ♪ we are farmers bum - pa - dum, bum - bum - bum - bum ♪ welcome back. stocks have taken a hit recently on fed tapering talk. we know that. it's the emerging markets, though, that have really been feeling the pain on those fears. cnbc's chief international correspondent michelle cabrera -- sorry, bill. >> that's lert. what have you got here for us, michelle? >> reporter: i'm going to talk why the emerging markets are getting hit so hard, even though we're talking about u.s.

monetary policy. why are they connected? well, when u.s. interest rates start to rise, everybody else's interest rates start to rise. we're considered the best credit risk. so whatever we pay, everybody else pays more, because they have to pay a premium. as a result, we're seeing a big sell-off in the emerging markets. look at what's happened to india. very hard hit in the last two days. indonesia, et cetera, brazil as well. one of the reasons why is when interest rates start to rise, you get worried that an economy is going to slow down, right? we all talk about it here. you worry about it in foreign countries, as well. plus, if you're an investor and you've invested overseas, but suddenly get a higher interest rate in a more developed country, why would you take the risk in a less developed country? so that's part of why we see the sell-off. then, that leads to a big knock-on effect in those countries in the currencies. like the indian rupee has gotten hit hard. why? when a hedge fund sells assets, some securities in india, they get paid in rupees. they don't want rupees, so they go to the bank and they sell the rupees to the bank.

guess what? lots and lots of folks are doing that. that means a huge supply of rupees. so that currency has been falling. what people in emerging markets really worry about is something called a sudden stop. vernacular that came out of the latin american debt crisis in the '80s. that's when suddenly dollars stop flowing to a country. it becomes a real problem for that country. because they can't buy things like oil, which has to be bought in dollars. the other issue is, what do do you? do you just let your currency fall or do you step in with interest rates? a lot of countries don't have flexibility, because they have high inflation. >> those countries will have to rather than let currencies do the automatic stabilization of the country, they'll have to increase rates. here we have india, we have brazil, we have near, we have turkey, appear to be countries more in need of foreign financing, and will probably suffer more of an impact. >> reporter: imagine they have to keep raising interest rates at the precise moment when they'd rather not, because their economy needs the help. but then it doesn't happen.

so that's why it's a tough, tough ripple effect in emerging markets. guys, back to you. >> yeah, it has been tough. thanks, michelle. >> thanks. 10 minutes before the close. we have a market up to 17 points. we're losing it, bill. we are well off of the highs. >> if we do finish positive, we snap a four-day losing streak for the dow. when we come back, we'll talk about whether the bulls are back or if the recent pullbacks are getting started here. later, cme group chairman and executive chairman terry duffy will join me. we'll find out how the regulatory environment is impacting his business. that's coming up on "closing bell." [ kitt ] you know what's impressive?

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welcome back. we have a market that is up, but off of the highs, bill. up 15 points. >> very much. let's talk about it with jeremy hill and tim spees. are you buying the dip, or what are you doing here? >> it's great for the long-term investors, which we'll talk about, but there could be pullbacks and volatility depending on upcoming move. to see the treasury pullback, that could cause skittish in the markets. >> you think the long-term trend is higher? >> yes. >> that's a big deal. it tells me, do i want to wait to get in at better prices? >> ugh, but it's hard to time the market. that's the problem. >> are you raising cash? >> we're -- we have our clients

that are moving monies from cash into equities. >> into equities. >> some are waiting. of course, you know, there's great -- you know, talk about municipals, but even some great municipal bond yields now that considering your risk tolerance could be appropriate. >> jeremy, what are you doing? >> we think the market's really paranoid right now. to quote william burrows, paranoia is based on facts, and the facts are pretty obvious. the fed has told us we'll taper. so the sell-off right now, we think, is pretty rational. we think when you look at equities, it's obviously a cash flow. it's discounted by the cost of capital. the cost of capital is going up, off of higher rates. of course, we're selling off. we actually like europe more than the u.s. for a shorter-term trade. >> that's been increasingly the sentiment. that europe seems to have bottomed. what about emerging markets? >> well, i wouldn't go anywhere near emerging markets. >> okay, okay. >> risk is too high there. the fundamentals in europe are definitely better. if you look at the spread, it's -- it's coming together. and that's a very positive sign for the markets. >> if you're looking for a lower

entry point, you have it with the emerging markets. >> true. but emerging markets, historically, have continued to disappoint. certain countries, of course, certain countries in asia now which look good, again, from a longer term, many of our clients have gotten in to certain funds, if you will, that are focused on specific countries. you know, here in the states, there's really no doubt. you look at the employment figures from last month, you look at the new home sales from last month. you know, almost 500,000. the most since may of '08. so things here look good. the retail sales are -- overseas, you have to be very careful. e.u. is coming back, of course. portugal, italy, the other -- but that's still -- i would have exposure there, but you have to be cautious and patient. >> having said that, we know that interest rates in the u.s. are going to go up. is there a strategy for higher rates? what do i buy in a higher-rate environment, jeremy? >> we like taking advantage of buying the regional banks off the back of higher net interest margins, and also short the

homebuilders. we think that makes a lot of sense. if rates are going to continue to rise in a linear fashion. but they might not. >> gentlemen, thank you very much. >> thank you. we're losing altitude here. >> big time. >> quickly as we head toward the close. we'll see whether we can finish positive or not when we come back for the "closing countdown." >> join us for the cypress interview. t.j. rodgers is with us, defending his op ed. it raised eyebrows about how targeting the rich only ends up hurting middle and lower-income americans. t.j. rodgers is with us coming up. at a dry cleaner, we replaced people with a machine. what? customers didn't like it. so why do banks do it? hello? hello?! if your bank doesn't let you talk to a real person 24/7, you need an ally. hello? ally bank. your money needs an ally. a quarter million tweeters is beare tweeting.

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okay. final minute. a quick recap. we were down in the open, asia down big. we thought we might have had a bigger sell-off. it didn't happen. rallied. looked like we'd break the four-day losing streak. and it's looking like we may do that. let's see the last five days for the dow. because we have had these four down days. now it looks like we'll be positive for the day. terry dolan, what are you doing with this market? you've been buying dips here. are you still accumulating? >> well, off its highs, we started accumulating around 215, 250. yeah, we've taken a little bit of a brunt of it. we don't see much more vulnerability than 14-8 or so in the dow. >> we're making much of the eight-point gain. big deal, right? >> yeah, you have the summer still, you don't want the market to pull back too much, because you have money on the sideline, and you also have vulnerable

stocks out there that we all know about. >> yes, we do. thanks, terry. an annual event. the candlelighters of new york city honoring childhood cancer month. the closing bell ringers today. it does look like we're going negative all of a sudden on the dow. we'll have more on that in the second hour of the "closing bell" with the special guest host today of terry duffy of cme. i'll see you tomorrow. [ bell ringing ] and it is 4:00 on wall street. do you know where your money is? hi, everybody. welcome back to the "closing bell." i'm maria bartiromo on the floor of the new york stock exchange. the market losing altitude in the final hour of trading. the dow falling for a fifth consecutive day. it had been positive for much of the session. let's look at how we're settling out on the street with the dow finishing down about 6 points. nasdaq composite had a good day. technology, one of the leaders on the upside, 24 1/2 points higher at 36.13 and the stand & poors finishing up. the dow on a five-day run in negative