price gold at 1,300 bucks an ounce, ultimately a lot of these projects are worthless and they need capexr to save the balance sheet. >> they may not be able to access the credit markets because they're facing possible downgrades as the price of gold goes lower. >> i think you're going to see a lot of -- we're seeing some companies cutting back on their capex and i think that will continue. i think there's also a discipline that's taking place. buying back their stock and increasing their dividend because they have so much free cash flow. we like stocks like that. franco nevada pays out a monthly dividend. it has 60% gross operating margins. i think that's another great company. and rangold has lots of profit margins and is very disciplined. i don't think they'll go into any project unless they get a 20% return on their capital. some of these other gold mining companies like beaumont and barrick, terrible. newmont, terrible use of capital for the past ten years. >> frank, going to leave it there. thanks for your time. good luck. frank holmes. >> the point he made about capex actually coul

capex is coming down. getting through projects that they're actually building right now, of course. but the capex will come down, say, next year and the year after if the gold price stays pretty low. obviously, if it bounces back it's a different story. >> patrick, what most people don't realize is that gold miners outperform on the way down but when gold actually starts rallying it's almost 2-1 that the goal miners lin crease in value quicker than the actual metal. everyone stays away from the miner. is that why you're making this premise? >> yeah. our kool call is basically driven directly by the gold price. we do believe that gold stocks, gold equities are leveraged to the gold price. particularly when the gold prices come down. because obviously when your margins are thinner your leverage is going to be much bigger on the way up. >> patrick, it's good to see you. thanks for coming in. patrick chidley, hsbc global metals and mining research. dan? >> i would add one other point. the volatility we've seen

and the metric i use is ebidta minus capex.s is earnings before interest, taxes, appreciation, and amortization. subtract out from that the ca x capex. what does it really cost to maintain your business? so that's a really important metric of cash flow. the second one i use is p/e ratio. the market is pretty familiar with that. it's sort of an easy shorthand. so i like to look at that. and then the third one that's important to me is relative to the competitors what's the p/e? that's sort of what gets you to a place to start. i'm not necessarily look for the best -- i mean for the cheapest. i'm looking for the best. so a lot of times the cheapest is cheap for a reason. you've got to understand why is that p/e so low? do they have a bad market position? do they have a bad balance sheet? so it's really just a place to start. not a place to finish. >> right. and by the way, in terms of david einhorn's advice, absolutely do your own work on everything because keep in mind, like take a look at some of the conference picks from last

the explanation is that there is a time lag and each the capex situation has bottomed. hong kong, a half day of trade with the black rain alert. there was an ipo today, galaxy securities, china's number six brokerage by revenue. demand was quite high both on the institutional and retail side, about $1 billion ipo. there was a bit of profit-taking kicking in in light of the fact that at one point it had a pop of about 9%, 10%. did trim some of those gains but still did close about 32 cents higher than the ipo price. also, very quickly, australia consumer confidence down for two months in a row. that triggers a lot of concern as to how the consumers and how the economy will fare in light of the slowing mining environment. so, back to you. overall, a pretty resilient picture because of reassurances about qe here to stay. >> chloe, thank you very much indeed for that. meanwhile, here in europe, fresh record highs -- well, not record, recent highs for the ftse yesterday, highest since 1999 was the close, ended about 150 points away from the all-time high, just down 16 points

they are reportedly attracted to the steady cash flow and low capex required in the business. >>> notng west, a report says china's ali baba is not planning to list in the united states as initially thought. instead, the much-anticipated ipo will likely take place in hong kong. ft sources say ali baba doesn't want to deal with the regulatory scrutiny stateside. one banker told the paper that the ecommerce giant wants to make a cultural point by listing solely in hong kong. ali baba is expected to launch its ipo later this year and the offering could value the company at more than $60 billion. certainly a message to regulators, isn't it? after all the chinese companies listed in the united states. >>> on a different note, 100 years is developing a new business space. the company believes it's the first to develop the idea of health management, wealth management principles but optimal health and longevity. in the third of the series looking at new disruptive companies, ross westgate caught up with the president and co-founder, robert levin, at the follow the entrepreneur conference, and

>> no, it isn't, capex is improveing. it's improveing more slowly. we've had xhim momentum. the jobs report really should be reassuring that we're not going to see any protracted downgrowth in growth that we have been seeing in three summers. we see the moving average of payrolls up 200,000 for five consecutive months. that should by a suring. >> let me bring in rick santelli, you are on the neither one of you guys are buying into this rally right now, correct? >> you know, buying into it can be interpreted in several ways. if i was allowed to trade, i wouldn't be short the market. the question is whether i would be involved or not. if i was, what would i look for before all the ralph cramdens try to get out of the same porthole, i'm not sure. i can tell you what bugs me, though, royal scott did a piece a week ago. i did several pieces on it where there is about 6 trillion world wide in eme equity, private equity, global equity which probably moves into the stockmarket versus the traditional investments. these are central banks. the way the debt has responded. bob has been t

that means capex budgets start to improve, businesses start to invest and that benefits the cyclicaltocks the most. i think you've had a pretty decent ism pmis around the world, as well. banks are in very solid shape. >> and they have, and it was clearly after the labor report where this call by all the investment banks basically said go into cyclicals. the problem i have is the central banks keep orchestrating all these evc monetary policies but we're not seeing the global growth reflected. >> yet. >> yet. and the concern i have is all of these portfolio managers that shift out of what's working right now which is clearly the consumer staples. and the reason you're seeing the multiples -- >> they're getting expensive. >> back in the '90s, scott, the multiple on consumer staples was above 20. right now the multiple on consumer staples is 19. i don't want to make the move right now until i see the global growth evident. and you know what the best indicator would be, if you're going to see global growth, let's have a u.s. ten-year treasury. >> and the pmis and isms for these stocks to

where their cap ex is, these guys have to lower it to commence rate with the weaker yen and higher capex running into the ones out of japan because they're really making a boom. >> dennis, can this export trade continue? in other words, can the yen further weaken? >> i think the yen can weaken dramatically for the next several years. i've argued for a very long period of time, having remembered trading dollar yen at 265 and 285 yen to the dollar 25 years ago and a mere eight, nine and ten years ago when we were trading 2.65, moving through par is i think inconsequential. i think we're moving to 1.25 and maybe even higher. so if you're one of the companies who's got a problem with losing $80 million on one big-figure move, you've got a big problem. on the other hand, if you're an exporter, life looks good for the next several years. >> toyota, we talked about this at 98. it's actually doing better now than the end trade. i still like tm. >> stricter lending conditions and falling commodity prices are creating opportunities for companies like silver wheaton. silver wheaton gets the right t

but the semi-cap equipment names, in particular, and we've been talking about our expectations at capex, we're way high on the street. and our sort of conviction is that, you know, through this year and next year, it's going to be meaningfully higher than what street expectations are. that's bullish. and i think that thesis was played out. >> we'll give you the last word. >> i think it's really interesting, for the bond market here, there's been chatter about fed chairman bernanke retiring. we might have a seinfeld episode here. we know fed chair bernanke will be leaving on top with the way the economy's improved so much since the great recession. maybe we'll have a costanza moment with fed chairman bernanke. >> thank you, gentleman. have a good weekend. >> thank you. >> george costanza. >> and ben bernanke, there's a pair. >> we're in the final stretch for the week, for the months. 5 minutes before the closing bell sounds. a market that is lower by 80 points, having given up all of the gains of earlier and then some. >> i've been looking forward to this all day. after the break, a wall

tech spending, capital structures have been strong, because first quarter was not a prime period for capexonomic outlook improves. >> all right. >> confidence. >> thank you so much, gentleman. >> appreciate you joining us. >> we'll come back with the closing countdown for this first trading day of may with the dow down 144 points. >> and a big day for mark zuckerberg and facebook. the company reports earnings in the wake of a new mobile strategy. will investors like what they hear? the news, just a few minutes away. you're watching the "closing bell" on cnbc, first in business worldwide. [ male announcer ] this is betsy. her long day of pick ups and drop offs begins with arthritis pain... and a choice. take up to 6 tylenol in a day or just 2 aleve for all day relief. all aboard. ♪ [ agent smith ] i've found software that intrigues me. it appears it's an agent of good. ge has wired their medical hardware with innovative software to be in many places at the same time. using data to connect patients to software, to nurses to the right people and machines. ♪ helping hospitals treat people even

we haven't really seen it in capex yet, but if we see the u.s. we might see that change in sentiment and the companies really finally start spending an investing. >> daniel morris from jpmorgan asset management. thank you for joining us. >>> coming up in the last half hour of the show today, bank of england governor mervyn king is due to strike a high note in his final assessment of the uk economy today. we'll bring you his last quarterly inflation report. it breaks after this break. ♪ the new blackberry z10 with time shift and blackberry balance. built to keep you moving. see it in action at blackberry.com/z10 >>> "worldwide exchange." heez will the headlines. eurozone gdp shrinks more than expected in the first quarter, the longest retraction on record. france is back in recession. germany's growth weaker than expected. the bank of japan pours more than $27 billion into the money markets. it wants to ease the spike in long-term bond yields. the nikkei, though, is riding the weaker yen to a fresh 5 1/2-year high. and british unemployment rises i

keep waiting for those figures to balance a little bit, every time we get durables we look for core capexfor that to feed down to job growth, something that's also been frustrating. >> no question about that, as well. as we all know job growth has done a little bit better if i can put my optimistic hat on. it's not what i would like to see or need and back to conversations that we've had in the past. the numbers are good enough for the stock market, but they're not great if you're looking for a booming economy. >> so with all of this that we've gotten in the last ten day, bob. japan, here, we're looking at the first consecutive weekly close on the s&p. are you looking to walk away from risk as e larian put it yesterday? >> you'll recall from early march to mid-april, five, six weeks the stock market was kind of stuck at 1550 on the s&p. >> maybe we'll spend a few weeks around 1650, consolidate all of the things you just said and kind of sort things out, try to figure out what do second-quarter earnings look like. i don't see a lot of down side, famous last words, but on the other hand, i

more about this in a success, but the problem seems to be it's more about buybacks and less about capexterm negative. >> let's get to phil lebeau and these ford numbers at the bottom of the screen. >> carl, we have better-than-expected numbers coming in for ford for april auto sales and an increase of 18% and the estimate was for an increase of 16.2%. it breaks down like this, cars up 21%, utilities up 16 and cars up interest and in particular, i want to focus trucks. f-series sail sales increased 24%. combine that with chrysler who said ram truck sales last month were up 49%. it is clear that we're seeing a definite re-stocking of the pickup truck inventory in this country and that certainly bodes well for small businesses and contractors. ford up 18% in april. we've got the gm numbers coming up in about a half an hour. back to you. >> that is a big deal. your point about the pickup phil, is well taken here. the pickup truck is a small business story. >> the f-150 is a small business story. ford is having problems in europe, if ford gets the restructuring right. look at that stock and

either in the parks business or at the studio business, frankly, they've done a good job spending capexition dollars to try to fix any of those issues. you think about the disney animation unit and you think about the parks with their investments in the cruise ships. you're seeing that flow through the p & l now. well managed, well analyzed deals. >> anything that you would take issue with that iger's doing? >> well, i think the interactive need works, joe. i think they should have bought the whole cow with electronic arts rather than doing the joint venture. they spent close to $1 billion trying to figure out the interactive business. they've got a big video game coming out trying to mimic sky landers from activision. and they've been trying to build and i think they should buy because this is a business especially given the youth orientation that they need to be in. >> what was that pixar -- how does that pay for pixar? how much was it? >> i think it was about $5 billion. it was a huge amount per film, but if you looked at pixar, joe, they needed the creative content because the cupbo

at the same time we have worries about capex and signs that companies don't appear to be in any rushts. which of those two, do you think -- which fever breaks first? >> well, i think that security and information management are areas that according to idc are both growing in the 6% to 8% range. even though the i.t. and capital market is difficult. the market is still growing because information is exploding and the security environment is more challenging than ever as witnessed by the intro you gave on the threats that are out there. >> you know, steve -- >> good morning. it's simon hobbs. you started this interview by talking about the cyber threat as being a national threat, but actually it is fought by individual companies and individual attacks that have to individually have to protect themselves. do you think we have the right struck are in fighting off what is happening at the moment because it doesn't appear that we're leveraging economies of scale to fight what is a national attack. >> couldn't agree more with your comment. it's individuals, businesses and its countries that