s&p 500 in january up 4%, hedge funds up 3% according to barclays hedge. this report out this morning about 11:00 eastern time. we're getting outflows from the hedge funds $15.2 billion. that's nearly 1% of assets. biggest monthly outflow since july of 2009. why do i bring this up? it's interesting because apple dropped just about the same time this report came out. apple widely held by all the big hedge funds. that stock had a very interesting drop. look at that. right about 11:20 eastern time. not clear why that happened. but apple traded nearly 20 million shares, sue. that's almost a full day's volume just in the middle of the day. >> pretty dramatic move there indeed, bob. thank you very much. from stocks to commodities, crude oil was edging higher. it's just started to tick to the downside. bertha coombs is tracking the action at the nymex. >> hi, sue. crude oil has been on either side of unchanged today. which to a certain extent the bulls say is a bullish sign given we got a lot of bearish data starting with the currents for the oil markets, that ch

to adjust the hedge and they start losing money on the underlying them start losing money on the hedge and suddenly something that looks matched doesn't match and i sincerely doubt the fed was looking at that and we saw that and that appears to be rival losses lehman got to be so big i mean every time the lehman a six hundred sixty billion dollars bank with roughly half of it in in collateralized exposes with the other half was unsecured creditors they lost they lost i think we've come to the right half cents on the other half of their money so they lost in. they were still putting the go last numbers i saw or they're still estimating but the numbers were over two hundred billion six hundred billion dollars plan they're going to get seventy five we're talking only seventy five billion so only right at seventy five billion to disorderly collapse and i saw i've gone through the numbers in great detail in terms of what it could have been on the asset side of the balance sheet because everybody knew the marks were too high a lot of stuff and you still have a at least a fifty billion dollar

the performance for many hedge funds this year is superb. i think what we saw for most of the day was this exact phenomenon. why? because most of the profit taking was concentrated in huge winners. the banks, retailers, plus nobody seemed to want the oils to do any damage to portfolios. they are kicking them out. of course, it is awfully tough to keep a fabulous market down. after the lock-in was completed, you saw an explosion in buying across the board. particularly china. china on plays. china on. remember, we don't believe in that risk on/risk off, some sort of yesteryear hedge fund gibberish, except when people came on tv. at least interest rate cuts, in china, clearly somebody smells the chinese rate cut. maybe as soon as sunday night. take joy global, one of my favorite companies, the acknowledged leader in mining equipment. today, cut numbers, joy, as we put it in the trade. of course cuts came from weakness. horrendous 20% decline. incredibly cheap natural gas prices. prices we're enjoying. i mean, unless you're ultra pete or in whi

and if going to hedge yourself against the uncertainties. i find there is not a clear scenario but a sense of theious issues on the table. >> thank you mr. chairman. my time expired. thank you. >> thank you, senator. >> thank you all for your service. the thing i talking about oil p and gasoline prices and what it means to the people at the pump. in west virginia it's close to liquids, compressed natural gas, things of this sort not traded away, you're traiting all. we have a lit more control of our destiny. even in secretary chew has said cold liquids with biomass make sense. it does not leave a carbon footpri footprint. the germans perfected it in 36. senator jennings randolph flew a plane from west virginia on the liquids.we cldn't even get a bi passed to use alternative fuels for our military which makes no sense. yet we are held aptive by global markets that they they have no control over. i thought it might be hard for you being in oo if i could hear from all of you, do you not believe that we should be changing and could change, and i

. >> from small-time investors to sophisticated hedge fund managers. >> all these guys did was just dump money in, do no due diligence and count their money. it's amazing. >> smith: did madoff say to you, "don't put me in your prospectus?" >> yes, he did. >> smith: do you think that's right? >> and where were the regulators? >> "why didn't you find him?" is the question. >> i blame the government. i really, truly do. >> tonight on frontline, correspondent martin smith unravels "the madoff affair." >> frontline is made possible by contributions to your pbs station from viewers like you. thank you. and by the corporation for public broadcasting. major funding is provided by the john d. and catherine t. macarthur foundation. committed to building a more just, verdant, and peaceful world. and by reva and david logan. committed to investigative journalism as the guardian of the public interest. additional funding is provided by the park foundation. dedicated to heightening public awareness of critical issues. and by the frontline journalism fund, supporting investigative reporting and enterpr

good hedges. so if you look more broadly, our banks are exposed to european companies and banks. again, they've been working hard to have -- to provided a -- provided a get hedges. >> could you explain to the committee, to this member, too, the situation as far as credit default swaps and why they're not deemed to have -- some nations default to trigger the action on that. what's going on here? is this a government intervention? >> no, sir. there is a private body, the isda, which makes determinations whether a credit event has occurred. >> when a default happens? >> that's right. and in the case of greece, thus far there has been a so-called private sector involvement, a voluntary agreement with the private sector bondholders. there's also been exchange of bonds by ecb and other government agencies with greece that essentially give some protection to the ecb for its greek debt holdings. the news this morning, i believe, is that the isda determined those two events did not constitute a credit even

i'm nearly always hedged one way or the other. short emerging market stocks as a potential hedge. >> jim, thanks for waging up so early. if the collapse in the chinese shares come to fruition, my belief is that this whole run up that we've seen in u.s. shares is predicated on continued china growth. what does that mean for the u.s. stock market? >> well, i'm very pessimistic about the u.s. stock market. social by the end of this year and into 2013 and 2014, it doesn't even mean it won't continue to rally this year. there's an election this year. mr. obama wants to get re-elected. he's doing everything he can to get re-elected. spending money, printing money, putting out good news, artificial or not, but later this year it's all going to catch up with us. i happen to agree with you 100%. i'm really worried about 2013 and 2014. >> all right. jim, stay right there. we're going to continue our conversation with legendary investor jim rogers on the other side of the break, including a shocking emerging market play. stay tuned. ♪ ♪ here

for risk management, you have to be hedged. when you go into the april to august period, you see massive drawdown. you can have the best idea on the planet, but that doesn't matter. be careful and find protection and again using that is a good idea. >> seeing much activity when it comes to iwm or any other small caps. >> what's interesting to me is if we take a look at how it behaves, the price of options continued to decline. the index itself has been more volatile. they tend to disburse and they trade much more steadily. you see rising correlation, they start to be more volatile. you see slightly increasing volatility. people could be more skiddish here. >> you might have noticed hot topic is one of the companies on the list. part is "hunger games" merchandise. guys are loading up on t-shirts. >> i love them. >> i'm sure you do. the ceo lisa harper will be on the show to talk about the stock. >> before we close out, anyone know where john cougar was born? >> i want to say indian a. >> seymore, indian a. >> next up, if you own

it's a margin business so you've got to hedged off their daily activity in a mine might hedge off a year or so but the hedge off like five or six years of total global supply and when you see what they have in the public domain as far as how much sort of habits pathetically small i mean this is just ridiculous and again i go back to the authorities and where are these people you know it's obvious what's going on and you know they've been looking at missing for years now and have yet to make a statement and then this happens just recently one of the last smash down again no comment i mean i think people it has people are awake and aware of certainly had it and it's just frustrates me they even more again rather time but will think again soon thanks so much for being a report thank you max it was a pleasure to be with you all right nothing to do it for this edition of that has a report with a nice keyser and stacey have i thank my guest david morgan from haifa an investor that he is these guru make no mistake about that it's not the same e-mail at kaiser report r.t. t.v. that are you and t

you know so that they're not these are like they put in a hedge and they can go like forget it they have to keep we just ahead just during the day and markets seize up they suddenly lose their ability to adjust the hedge and they start losing money on the underlying and start losing money on the head suddenly something that looks matched doesn't match and i sincerely doubt the fed was looking at that and we saw that and that appears to be why the losses that lehman got to be so big i mean every time i believe in a six hundred sixty billion dollars bank with roughly half of it in collateralized exposes with the other half was unsecured creditors they lost they lost i think they've come to the eight and half cents on the other half of their money so they lost in. they were still quoting the go last numbers i saw were there so i estimated that the numbers were over two hundred billion six hundred billion dollars plan they've only triggered at seventy five we're talking only seventy five billion so only right at seventy five billion to disorderly collapse and i saw i've gone through the

and mainly a union state dollar stores particularly not hedging the labor. they tend to be very efficient boxes. and we think that the opportunity is significant. these retailers are extremely efficient, tend to just have ten employees per store at any one time and a store manager. they also tend to be priced basically in line with walmart and have really attracted the attention of national brands. they do have a private program, but the real opportunity here is national brands at walmart prices located in your backyard. >> okay. thank you very much for joining us. >> all right. on deck, is your college kid being targeted by credit card companies? again the new loophole bringing together social media and spending. >> plus, doing business in cuba. the island's nation has been seemingly frozen in time due to america's long standing embargo. but there are exceptions. we are live in havana to show you which american companies are profiting and how. >> and don't miss a special edition of "street signs" this wednesday, hiring our heroes. cnbc and nbc news have tea

the lawsuit is named hedges v obama and i spoke with chris hedges earlier this month about the lawsuit. moves due process for anybody who is deemed not just a terrorist to have could be associated forces that's not a term that's defined it's no. it's quite a frightening piece of legislation and chris that in addition there's nothing that gives exceptions to journalists and since he personally has done several interviews with groups deemed terrorists this could impact him and others like him who are simply trying to get a deeper understanding of people whose perspective perhaps the u.s. government doesn't want out there for a while as an attorney with a law and security program at human rights first and he's here to talk about some of the legal implications here first of all let's let's talk a little bit about the lawsuit itself i know from what i understand yesterday was sort of a preliminary thing they were giving statements about why this is important i know our last week chris hedges was questioned by the government for four hours to make sure he was deemed a suitable plaintiff in t

but for michael hedge, it is impossible.ows the moment his life changed forever. >> i'm quite concerned that my children never see that video. i would never like to see that video. >> reporter: hedge's wife, marion, was standing on the ground level of the parking garage of this east harlem target store last november, when 13-year-old giovanni rosario, and 12-year-old raymond hernandez decided to pull a horrific prank and toss a shopping cart over the edge. this video shows a third boy, achilles baskin in a white hoody, trying to stop his friends, to no avail. >> we knew about the third boy. we're grateful that he made the effort that he did. >> reporter: the cart plummeted five stories and landed on marion hedges, a mother dedicated to charity, who had stepped in to buy halloween candy for underprivileged kids. she suffered critical injuries, and even now, months later, her recovery is agonizingly slow and excruciatingly painful. >> she can walk five or six blocks before she starts feeling nauseous and dizzy. our family is u

one was in a publication for hedge fund managers. so sort of obscure and one was in aaron's magazine where diana used to work. that book russian madoff at a lot of what he is doing doesn't make sense, a lot of the things he is saying that he is doing in the options market, for example, there's not enough money in that market, there's not have shares in the market, it's not possible that what he's saying is true because at that point need of those got a whole lot of press, but bernie knew about them and was concerned. and he called one of his biggest investors, a group that he really depended on for a lot, a lot, a lot of money, many millions of dollars and had a guy come over and said are you worried, let me show you how i do what i do. so his name is tucker, the guy who comes over. when tucker arrived with his due diligence visit, madoff was ready, thanks to frank's creative efforts. decides the phony trade confirmations and account statements that it can generate more than a decade, he set up a bogus trading platform that made it a

he's now not hedged he's just planting so this is creating another too big to fail system because if you think the quiddity in financial markets is too big to fail we need this what about food on your table right there's no hedge against blight masters i mean this farmers to be able to buy life masters futures contracts in the open market to hedge himself against this part of the story nightmare blight masters and the entire futures markets has come full circle as you point out they were invented originally to give farmers a way to get some price stability but they were hijacked by the financial futures markets in the seventy's and eighty's so they had currency futures and treasury bill futures and all kinds of securities futures that are outside of the agricultural sector now they themselves have morphed into the colossus that's putting a risk the very farmers for whom these structures were created for to begin with so now you've got futures risk so you've got tornado rist hurricane risk flooding rest drought risk and blight masters risk so this would be a futures contract for farme

>> reporter: nok started risk hedging efforts soon after the march 11th disaster, but last october the company suffered unexpected damage from the floods in thailand. they flooded out nok's local plant that makes electronic parts. the firm was hit -- that had made reduction a more pressing challenge. the company is very concerned that it will suffer a reduction in its global market share. that is its rivals have been building better supply chains and production shifting. to survive the more intense competition. >> what are some of the challenges facing japanese companies in their risk hedging efforts? >> reporter: there is a a concern that setting up more bases overseas could produce leakage of japan's know how. japan firms have focused on making high value products at local plants. making such items overseas needs technology transfer this may be a leak. companies in emerging economies will believed to be keen to get japanese technologies specially those of leading makers so the challenge is not just about how to hedge risks, but also how to avoid technology leaks. so some japanese com

they used to be hedged in third quarter last year. they took off hedges. is natural gas. they are trying to move more toward liquids but they have a big cash shortfall and they need to sell assets to have any chance of covering that. >> recent announcement by ge and chesapeake trying to get natural gas into a surface fuel in a big way. when does that happen? when do we cross that tipping point and what happens to prices as a result of that? >> if d.c. won't wake up and focus this country's energy on natural gas, the private industry will. basically you're going to see a lot of private capital come in and try to take advantage of this disparity. it's going to be long-term. three to five years. structure build up. at the same time, it's a great announcement for this country. i'm excited about it. certainly it should bode well for natural gas market. >> it sounds like if we do in fact tip these secular lows in summer, that's it. you don't see us going rehitting those or retesting those levels after that? >> i think prices will clear out inventories that we ha

and 2011 wasn't a great year for hedge fund managers.ing ray dalyo earned the most of hedge fund managers at nearly $4 billion and followed by krarl icahn. john paulson fell off the list this year entirely. >> microsoft is hoping its upcoming windows 8 will help it make inroads in the tablet market. that's every's question about whether it can really work. rick shirlen joins us. if they mess this up, it's not good, right? >> pc is not where the growth is. microsoft has not been well positioned. there's windows 8 that will position them better -- >> it operates on touch screen? >> yeah, it's touch screen. apple will continue to dominate the tablet market. microsoft might get like 5% of the market in that sector. the other half of the consumer market has value associated with office and i don't think you'll see office on the ipad. and there will be a new device called the ultra book touch, your really thing mac book era-like notebook. it will be able to pull a screen off, use it as your tablet, handwriting recognition, save the files up to

as much as they purchased in all of two thousand and eleven because they weren't going out to the hedge fund humanity that the next round of quantitative easing going to be buying back his agency debt for car four hundred cents on the dollar and so it's another gift to the banks and the hedge funds they're telegraphing what they're going to do it's insider trading again for the banks but the entire modus operandi of the federal reserve is to target stock price as the basis of their policy they don't target employment or wages or savings those people are considered not part of the economy and they are not factored into any of the data that is cole aided by the government to inform them as to the health of the economy so the savers are continuing to get a repressed and the people with. wages or jobs are continuing to be pushed off the grid but the speculators are continuously getting gifted and we call that a recovery it's a recovery in fraud fraud is never going to hire well you mention that these insiders these bankers are buying up agency debt with the expectation that a q e three is c

have to see where that all goes but we'll talk to someone who's been blowing the lid off of banking a hedge fund corruption for years terry buel is here to bring us into that world firsthand and tell us about her latest story of sex and scandal it's already been sued over and kone two thousand and twelve fastest growing viral video in history of internet campaign about the lord's resistance army leader fronted by a handsome activist filmmaker has also drawn its fair share of criticism ok here's jon stewart talking about the flak it's received from the mainstream media. mainly . just seems annoyed that it took this guy to get people to listen to a lot of major news organizations have talked about joseph kony and talked about the right way. well for those of you would stop paying attention to the mainstream media look at one of the new journalists are turning to to circumvent it it's called crowdfunding we'll talk about how it's being used to possibly expose financial crime and the m.f. global plot thickens as as c n b c contributor and c.e.o. of the n.b.a.'s clearing group is sued by the com

an effort that searches for hedge fund advisers whose claimed returns are unusual enough to raise a red flag. in december, as a result of one of the sweeps, we charged four hedge fund advisers for inflating returns and over valuing assets and other actions that materially miss h lly misl harmed investors. we are working together through different initiatives to target various types of misconduct. and these initiatives will again, be particularly important to our efforts to detect fraud before complaints are received. one can clearly draw lines from the restructuring and results. one unit created, the asset management unities, took the time to survey a group of firms that were actively communicating through social media. in the process, they learned about the various approaches firms were using. getting a sense of those were that were legitimate and those that may not be. shortly thereafter, a staff member noticed something irregular in the operation of an illinois based adviser, and in short order, it was uncovered that the adviser was offering fictional securities through various media

fund guys in greenwich connecticut in new canaan in this hedge fund community so this is why i think it's important for people to understand that these hedge fund guys when they're not ransacking greece we're not destroying the american economy we're not destroying mr palings when they're not you know acting outside of the last feeling money from customers of m.f. global they're out there and came in to came to connecticut ordering threesomes having orgies you know lit up like rome or something like this tell us about. your investigation now the subject of investigation is trying to silence you correct how they've done this you know you're right. at the end of january merrick's mitch vance quiz hired a famed greenwich lawyer whose name is mark sherman his father used to represent the mob unfortunately his dad also played guilty to tax evasion he he just didn't pay a million dollars in taxes so so he hires this kind of you know in between the gray lines attorney and they sue me and c.m.d. c. for defamation. they did something else really rare in a legal move they did something called

. >> ty, the hedges are off the ledge. hedge funds turning in the first quarter a whole lot better than the 2011 performance. we'll talk about the trading strategies driving the komback and making big money. >> and the story talked about pretty much every water cooler, jetblue pilot freaks out during a flight and passengers have to subdue him. that airline has had more than its share of bad publicity over the few years. we'll give them a grade for crisis management. >> and i'm sue herera along with tyler mathisen and brian shactman too. fasten your seat belts, "power lunch" begins right now. >> and turn off that cell phone too. a disappointing durable goods report. the energy sector is slumping. some fresh worries in europe. this time about spain. result is u.s. markets lower for a second day in a row. here's where we stand right now down 84 points in the. significantly weaker than where we started the day. s&p down and same for the nasdaq. energy is a noticeable story today. crude oil down more than 2% right at 105 a barr

the lawsuit is named hedges v obama now i spoke with chris hedges earlier this month about his lawsuit i thought it was important removes due process for anybody who is deemed not much use to terrorist but to have contact with these associated forces that's not a term that's to find it's nebulous it's quite a frightening piece of legislation a whole lot of stuff in that legislation but nothing in there they gives exceptions to journalists and since chris hedges has done several interviews with groups it deems to be terrorists he thinks this could encourage him and others like him who simply are doing their drop their job trying to get a deeper understanding of people whose perspective well perhaps the u.s. government doesn't want out there raw of all is an attorney with a law and security program and human rights first and he stopped by our studios earlier today to talk about some of the legal implications of the bill and the lawsuit against it here's his take. well i think your introduction to this segment really kind of got at the core issues in this case basically what the law says

you may start to see some -- this may primarily benefit the smaller hedge funds that do want to reachinvestors. >> this is such a business saturday -- what's the timetable on all this? >> so there's some rule making that needs to be done by the sec and they have about 90 days to have that done under the current act. there does need to be a comment period, lawyers who represent the hedge fund will look for next year or last year for momentum. >> it's part of a bill that was dedicated to jump-starting small businesses, so how did the hedge fund provision find its way? i think i know the answer. we all know how congress works but how did this happen? >> i actually asked myself the same question, and i looked into it today. this was done a lot by house republicans, whether it's businesses large or small. >>> the health care sector provided people -- health care fund manager had the upcoming supreme court on obama care might impact the way he invested in the sector. >> the supreme court was supposed to rule on that today. >>> which state do you think tax the highest for lottery winnings. h

rule is to reduce risk taking by institutions, and we're trying to do that in a way that will permit hedging and market making. >> when you have a rule that people describe like in many ways pornography, in other words, you know it when you see it, it is hard it to make a rule. would it be helpful if congress clarified the fact that market making is a -- is not intendeded to overturned by virtue of volcker rule. market making is a very valid and appropriate process for these regulated entities to be involved in. do you think that might help? you've got all these comments and regulators trying to come to the conclusion each being pushed by various constituencies and congress outside. would it be helpful if we clarified that as a congress that market making should not be negatively impacted by the volcker rule. >> the federal reserve pushed for these exemptions, and i think the statute is clear that market making is exempt and we want to do our best to make that operation operational. >> i think we're generally speaking on the same page in the volcker rule. we don't want it to do damage to the

if i do want to hedge it with the cds, i won't feel it's an effective hedge.ers. >> i buy fire insurance for my house. the house gets on fire. they come and say, listen, that wasn't particularly the kind of fire that we're going to pay off on, that was a different fire. to me fire is fire, by maybe i don't know the difference. >> half your house is still there, you're fine. >> 20%. >> yeah, you have a bathroom and a bedroom, sorry. >> why do you need the whole darn house? it doesn't seem right to me. >> we have that, all the economic data. and retail sales, what is up with gap today, blowing it out after expectations of a miss. >> it's incredible. >> these are number -- gasoline must have gone down big during february, because these kind of numbers are amazing. >>> see you in about six minutes. >> thanks, guys. >>> coming up, final thoughts, george pataki, "squawk box" is coming right back. the equity summary score consolidates the ratings of up to 10 independent research providers into a single score that's weighted based on how accurate they've been in the p

they have hedges in the other direction to protect them from loss. >> what's the credibility in the hedges? where does the strength of the hedges come? >> written by a variety of strong -- a stronger european institutions and we're quite comfortable that -- we can't imagine a scenario where essentially every major consequen constitution -- >> explain to me. if i'm not correct, you did express some reservation, there was one area of exposure -- currency swaps, i thought i heard that in your testimony. >> no, we're quite comfortable with the securities and swaps. >> let me ask one closing question from either of you. we're also living in a very dangerous world and i know you run these with respect to models. the instability currently existing in the relationship with iran and what may happen, to what extent may these models be impacted by what may be a very problematic future with regard to global unrest? can this whole system be subject to a complete reordering if we have significant instability in the middle east? >> you mean our banking system? >> yes. >> so, we haven't done stress test b

this is what i used to scream when i was a hedge fund manager -- >> you screamed when you are a hedgenager? >> at that point i didn't have my temper under control. bozo, please take your numbers to dollar loss, and then they would beat it and the stock would go higher. >> i met a woman over the weekend who worked at a bank and said i was often at the other end of the line with jim cramer, and she still had the shakes. >> that was a before the revolution in pharmacology. it's made -- >> they were launched across the trading floor, that could -- >> chairs are heavy. >> very heavy. >> when you throe an iphone, you won't hit anybody, but a big old phone, that really hurt. >> the monitors are lighter, so when you throw them against the windows -- you know the windows are sealed at most wall street buildings. >> it's a new set, so be genting. if you want to throw stuff later on, i would love to see that. >> too fired up. >> david's direction. >> he's good. he's good. >>> when we come back, the manager of the world's biggest -- bill gross with an etf in the mix. we'll be right back. you have

but for michael hedges, it's impossible. it shows the moment his life changed forever. >> i'm quite concerned that my children never see that video. i would never like to see that video. >> reporter: hedge's wife, marian, was standing on the ground level of the parking garage at this east harlem target store last november. when 13-year-old giovanni and 12-year-old raymond hernandez decided to pull a horrific prank and toss a shopping cart over the edge. this video shows a third boy, achilles, in a white hoody, trying to stop his friends, to no avail. >> we knew about the third boy. we're grateful that he maid the effort that -- made the effort that he did. >> the cart plummeted five stories. a mother dedicated to charity, who had stepped in to buy halloween candy for underprivileged kids. she suffered critical injuries and even now, months later, her recovery is agonizingly slow and excruciatingly painful. >> she could walk five or six blocks before she starts feeling nauseous and dizzy. she had this vicious memory. our fami

approach in all matters is one of the hedging on a.k.a. the vampire squid protecting its power over possible but we thought i was a really great point because the reality is no you can't legislate or regulate or ality or greed and that seems to be a recurring theme that you cannot get away from and so much that we cover with the banking industry and wall street and the things we've seen over the past several years and the vampire squid which is goldman sachs for anyone who's living under a rock or not watching this show regularly. it is a really interesting metaphor to the u.s. approach especially as you see u.s. military bases spread out like tentacles to all over the globe so i have to hand it to you good metaphor there and f. our market said love the bank man and robbers that was a plasma graphic we put up with jamie diamond and lloyd blankfein as man and robber when we compared their p.r. now the bottom line he said according to our of your we all know how crooked and corrupt the banking system is and how it's aided by paid for politic