morgan goldman sachs but to answer your question the london metal exchange gets about one percent of these storage costs and that's how they're profiting in this goldman sachs game so if goldman sachs is making money london metal exchange's making money and so is hong kong and technically none of this is a legal right even if it is considered stacking the cards in your favor or some would call it overreaching no it's technically legal but it gets down to a concept called regulatory arbitrage we have rules and regulations in the us and a lot of those rules and regulations do not exist in london or the city of london or even hong kong so there is. an arbitrage game to be played definitely goldman sachs is playing that out right now so it is a conflict of interest is what you are arguing i think it's a conflict of interest because we're i have no problem with speculators per se it's when these speculators are financed by the federal reserve they're given free money to play with basically we had a near zero interest rate policy by brint ben bernanke in for five years so they get all this

the lme, london metal exchange have made proposed rule change which would ultimately equalize to some extent the inpsnd outputs in the warehouses and that would probably net-net be positive but it is going to take a long time for that to have an effect. it has not even been approved yet. and so during that period, i think we s still see supply chan risk and inflated preums. melissa: is there a downside to kicking the speculators out of this market? i just think, i covered energy markets for a very long time when you have speculators in the market they provide a service. in some cases they provide liquidity of they provide the other side of the trade. you want to lay off part of your risk, they're the ones that buy it because thhy don' have the same interests that you do. is there a potential downside that weeed to look out for before the rules a changed? >> yeah. i think the, there are may two levels of rule chang. i think the specific rule changes within the london metal exchange can happen independently and would have no major impacts on speculation or banking or whatever. the broad

aluminum storage market is one point five million tons of of aluminum there but now it's the london metals exchange which regulates it and the london metals exchange collects one percent of all of goldman sachs rent that they're able to charge their clients so these are the costs that they this whole sharod this whole dance of of lifting these huge bars of aluminum and she could see in the photo from the new york times and moving it from warehouse warehouse warehouse and this is the height of capitalism this is what capitalism has become is this just moving for nothing it's exactly like what soviet union did you know there's a parallel to the soviet union times for sure that the state would demand certain deliveries be made regardless of the market conditions and of course the collapse of the new america will collapse just like the soviet union did but when lloyd blankfein talks about market making what it really means is financialization what financialization means is that you take a market that's working fine and you add another market on top of it and then another market on top of that some woul

accused of manipulating aluminum prices by controlling large metal warehouses part of the london metal exchange network your thoughts so basically we have banks running a racket that's screwing over companies like these big companies that other companies that use aluminum the bigger picture here is that wall street the wall street economy the fire economy finance insurance real estate used to be about ten percent of our economy now it's now twenty five to thirty percent of our economy and starting to dominate our economy and it's doing that because it's preying on all the other industries in our economy through these rockets through price manipulation through all this stuff do we want an economy that functions based on manipulated fake money or do we want to have condom either functions on actually building stuff and actually selling and buying stuff now do you kind of on your side here but i'm just going to play devil's advocate it only adds a tenth of a penny to each aluminum can so it's not really coming through the case rumors anyway due to like three billion dollars so that to the penny ad

the top regulator in the metal business is the london metal exchange. goldman sachs did was two brilliant moves. the banks put themselves on the board of the london metal exchange so they make a decision on whether to regulate themselves and cut the exchange in on it, and say you get 1% of the proceeds if you don't want to lose that money you keep going along with this scam. michael, when you see that, i mean, isn't it a giant dereliction to not regulate. >> this confuses me a little bit. i will say that the point you made, cenk about the fact that they trade on these commodities i think it's the smallest point but has the large evident implication. that's them getting away with setting a market, taking any fair play out. i don't care if millercoors gets fair play. it's not like it's going to be passed down. when these big companies have the experience of being an end user and dissatisfied end user like regular people do, then maybe it gets through or at least they feel a little pain. the fact that that seems criminal that they're allowed to own 80% of

accused of manipulating aluminum prices by controlling large metal warehouses part of the london metal exchange network your thoughts so basically we have banks running a racket that's screwing over companies like these big companies that other companies that use aluminum the bigger picture here is this wall street the wall street economy the fire economy finance insurance real estate used to be about ten percent of our economy now it's now twenty five to thirty percent of our economy is starting to dominate our economy and it's doing that because it's preying on all the other industries in our economy through these rockets through price manipulation through all this stuff do we want an economy that functions based on manipulated fake money or do we want a condom either functions on actually building stuff and actually selling and buying stuff now if you don't buy that kind of on your side here but i'm just going to play devil's advocate it only adds a tenth of a penny to each aluminum beer cans so it's not really coming through the case rumors anyway due to like three billion dollars that it t

accused of manipulating a lot of prices by controlling large metal warehouse is part of the london metal exchange network your thoughts so basically we have banks running a racket that's screwing over companies like these big companies that other companies that use aluminum the bigger picture here is this wall street the wall street economy the fire economy finance insurance real estate used to be about ten percent of our economy now it's about twenty five to thirty percent of our economy is starting to dominate our economy and it's doing that because it's preying on all the other industries in our economy through these rockets through price manipulation through all this stuff do we want an economy that functions based on manipulated fake money or do we want to have condom either functions on actually building stuff and actually selling and buying stuff now if you will kind of on your side here but i'm just going to play devil's advocate it only adds a tenth of a penny. to each aluminum beer can so it's not really coming through the case rumors anyway due to like three billion dollars that attend

accused of manipulating aluminum prices by controlling large metal warehouses part of the london metal exchange network your thoughts so basically we have banks running a racket that's screwing over companies like these big companies that other companies that use aluminum the bigger picture here is this wall street the wall street economy the fire economy finance insurance realestate used to be about ten percent of our economy now it's about twenty five to thirty percent of our economy is starting to dominate our economy and it's doing that because it's preying on all the other industries in our economy through these rockets through price manipulation through all this stuff do we want an economy that functions based on manipulated fake money or do we want a condom either functions on actually building stuff and actually selling and buying stuff now do you want by that kind of on your side here but i'm just going to play devil's advocate it only adds a tenth of a penny to each aluminum can so it's not really coming through the case rumors anyway due to like three billion dollars that it tend to

melissa: i have asked to regulate the stem, they said the london metal exchange is broken.ust once again they are the smartest guys on the block, they figured out a way to get into the middle of th market and make a lot of money. they say jpmorgan wi be the next to do with jumping into the market. it is their way to changthis, or is this just part of the market? >> yes, there is a way to change it. at the end of the day a critical mass of metal on one hand, that is the bottom line. that is on type of monopoly. yes, there is a way to change this situation. melissa: just the smartest guys on the market or is there a way to change it? >> they have been very slow to once the rule changes because they benefit indirectly. melissa: can you make a rule to get ahead of them? >> the rules have to be updated for thera of deep-pocketed investors whether anndividual warehous owner doesn't benefit in the same way as goldman sachs might. a secondary question of whether or not "the new york times" asked if banks should be in the business at all. melissa: a question for another time on the

. >> the london metal exchange regulates the aluminum warehouse system, in response they own the warehousey investors, they control 8% of the market. 89 any scheme, and a 40% lower than they were in 2006. and not driving up the price of aluminum. congress and the federal reserve looking into regulations allowing and controlling bank's ownership of warehouses. power plants and other business plants. dennis: let the bank bashing continue. thank you, rich edson. cheryl: the fox business or time showdown. we are down to 7, to be the result of the monthlong stock plays, this friday we will say goodbye to rob morgan or jim fritz lang and they have more than their reputation on the line. >> this is rob morgan, chief investment strategist with fulcrums society in philly. i bet philly chief picks yours. i am so confident that if you win i buy you two. >> looking forward to summer time showdown, rob morgan and i accept his challenge and i will match it with new york's best pizza. cheryl: philly cheese sticks versus best beat the. loser pays up, got to watch the show down, thing to see who's pick. de

they're urging lawmakers to boost oversight of the london metals exchange.reating a bottleneck that is limited global aluminum supplies inflating prices. >>> and as mentioned, u.p.s. reports second quarter results at 7:45 a.m. eastern time. the package delivery giant is forecast to earn $1.30 a share on revenues of around $30.6 billion. david ross is an analyst and is with me now on the phone from baltimore. david, good morning to you. thank you for joining us so bright and early. so with regards to u.p.s., we already got the profit warning and we pretty much know that the second quarter wasn't that great. what exactly are you looking out for when u.p.s. reports today? >> basically we're going to look to see if some of the sluggishness continued into july and what their outlook is for the remainder of the year, even though they updated guidance so we have an idea, more color around that would be great especially as it relates to the u.s. economy, the european economy and global trade. >> the profit warning earlier this month, was that to you just temporary w

metals producers in exchange for storage space in their warehouses. over the past few years, tons of aluminum and other metals have piled up in global warehouses that are part of the london the trading significance tesystem. and that's caused prices to surge, prompting allegations that some banks and traders are zporti i distorting supplies. what's unclear is whether they'll move ahead with a formal probe. the agency opens dozens of investigations a year but only a handful result in actions. we'll be watching, of course. back to you. >> mary, thank you so much for that. >>> it was another record high for the s&p 500 last friday, but are the good times here to stay in we'll preview the trading day after the break. [ male announcer ] come to the lexus golden opportunity sales event and choose from one of five lexus hybrids that's right for you, including the lexus es and ct hybrids. ♪ this is the pursuit of perfon. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ aft

lawmakers and regulators to boost oversight of the london metal exchange. and the bank's ownership of ware housing firms, this has to do with the article in the new york times over the weekend. they argue that inflated aluminum prices have cost buying millions of dollars and the senate banking committee is scheduled a hearing today on whether banks should be owning physical operations from metals to ware housing to power plants and responded yesterday. said that -- another said that it represented a minute amount of the aluminum, but -- >> i think less than 5% was the goldman sachs response. all right. let's talk about -- what? i'm sorry i asked. never mind. >> there is somebody on trial now. >> let's talk about a few stocks to watch this morning after all the after the bell movers last night. shares of netflix trading lower after the company's earnings beat forecasts. revenue came in in line, but the new subscribers, that's what fell short of analyst expectations. julia boorstin talked to reed hastings and will join us with the highlights in the next half