Skip to main content

tv   The Claman Countdown  FOX Business  February 18, 2021 3:00pm-4:01pm EST

3:00 pm
course of the last week, good buying opportunity. he's the thing, investors view it as a housing play and it's priced accordingly. i think it's an ev play -- charles: aspn. mark, you are the man. liz z claman, mark just gave us an idea that reports after the bell. i love that gumption. liz: i know. can i be an usher at your next event where you're there with these guys? [laughter] charles: it was virtual. liz: i'll do anything. [laughter] oh, okay. charles: when we do the switch, i'll bring you with me. liz: oh, yeah, you got it. davos, here we come. thanks very much, charles. two and a half hours into the gamestop hearing, and we can say that purely from the standpoint of the ability to move a stock price, only one of the five key players in the january gamestop trading frenzy have proven he
3:01 pm
has that power. each time that the trader known as the roaring kitty, each time he was called upon to explain why he started load aring up on gamestop shares, the video game retailer stock has moved higher. specifically 12:38 eastern time. he says he formulated it purely by doing his own research and 59 minutes later when he was asked whether he'd buy more of stock right now, and he said yes. the action, which at times has been heated, continues at this hour. we're going to show you the crucial moments so far and dig into exactly what we're learning about market fairness, disclose your and hidden trading structure. the drama in this final hour not limited to capitol hill. stocks red all over but pare losses this -- paring losses as we head into the close. a bleaker than expected jobs
3:02 pm
picture, the nasdaq taking the biggest blow. we've got it down about 80%s, half a percent. fox business alert, investors big and small all around the world rivetted at this hour by the house financial services committee hearing entitled gamestopped: who wins and loses when short sellers, social media and retail investors collide? it became pretty apparent that robinhood's ceo vlad tenev was the biggest target. back in january as retail investors were piling into gamestop shares, ten never, with no warning, cut off customers' ability to buy gamestop shares. and that caused the price to plummet. >> in other words, you seem to reserve the right to make up the rules as you go along. so i have two questions for you. first, do you think you owe your customers more disclosure and
3:03 pm
transparency than you gave them? and second, do you believe your lack of candor with your customers might have contributed to the wild speculation -- >> i'm sorry for what happened. i apologize. >> your trading restrictions came out of the blue. >> we'll be committing to reviewing absolutely everything about this, but the 3.4 billion that we raised, i think, goes a wrong way to cushioning the firm from future market volatility and other similar black swan events. liz: yeah. that was multiple apologies that he made during at least the last two and a half hours. to capitol hill and hillary vaughn who's there and monitoring every single word. hillary, there are many moving parts here, but the heart of the matter is whether tenev somehow pressured by anyone whether it was melvin capital which was losing a ton of money on its short bet, to citadel securities to halt long trades, and so far
3:04 pm
i'm not sure that's happened yet. >> reporter: liz, that's right. robin hood's ceo was directly asked if there was any outside influence that played into that decision to stop their customers from buying gamestop stocks. he said no. he was under oath today. he also said anyone else here today, any of the other witnesses -- which includes melvin capital's ceo -- none of them pressured him or played a role. he said it wasn't the fact that short sellers were losing money on this at a rapid pace, but really because they were running out of money. they did not have enough capital to cover the deposit requirements for the surge of stock offers. >> isn't it true that being concerned about having enough capital to meet the requirements, isn't that a liquidity problem? could you just answer yes or no? >> chairwoman waters, i appreciate the opportunity to address that -- >> yes or no. >> we always felt comfortable
3:05 pm
with our liquidity, and the additional capital that robinhood raised -- >> please answer yes or no. >> we always -- >> [inaudible] i don't have time. i just need a yes or no answer. >> reporter: the hedge fund citadel was also in the hot seat and asked if they treat stock orders differently from a company like robinhood versus a company like fidelity. >> reclaiming my time, sir, who gets the better deal? >> one that comes from a broker who is paying, being paid for order flow and one not. can you testify that, on balance, there is no difference assuming the same size of the order? >> size of the order is only one factor. >> you are doing a great job of wasting my time. >> lawmakers also herald, liz, from that gamestop investor, roaring kitty, that made a
3:06 pm
whopping $7.8 million off of his purchase. he still says that even though there are accusations that he pretended to be an amateur trader online to encourage users to buy up a stock and run up the price, that's not what happened. >> two things i'm not. i'm not a cat, i am not an institutional investor. nor am i a hedge fund. i also believe the current price of the shares demonstrates that i've been right about the company. >> reporter: and, liz,one exchange that happened shortly before i came on your show right now, jennifer schultz from the cato institute was asked if a financial transaction tax could have prevented the frenzy that we saw with gamestop, and she said absolutely not. she said a financial transaction tax would actually hurt a lot of investors that are trying to save for retirement, and she says it wouldn't have done anything to address the volatility that they saw there. and, liz, why that's relevant is
3:07 pm
because house democrats in the wake of this situation are saying it proves that there is a need for a financial transaction tax, but it's clear that some experts say that would have done nothing to help the situation. liz? liz: yeah. and it's interesting, you know, maxine waters, who's running this committee, actually said just as i was rushing in to get in front of the camera, she said, hold on, we never said that we're going to pile in on regulations. this is sort of a fact-finding mission. but in the meantime, hillary, you keep listening. interrupt us if something else happens here. but let's bring in two key individuals who are market participants and watching very closely. tyler go lash who's been helping to educate congressional members on everything from short squeezes to market structure ahead of the hearing. he runs the trade group healthy markets and short seller gordon johnson, ceo of glj research. tyler, i'll begin with you. cut to the chase, please. has anything been uncovered or revealed that can enlighten
3:08 pm
investors about whether the retail investor, the little guy, gets treated fairly compared to the big hedge funds or wall street names? >> yeah. well, i think it's a great question, and the answer is, no. we still are wrestling with this existential question. we've made it cheaper and easier to trade more complex things with more leverage than ever before and more cheaply than ever before, but the problem is we haven't dealt with the consequences of that. the regulations haven't dealt with the consequences of, that including the consequences for big pension funds who are also watching the marketing volatility and are also real retail investors. so the answer is this hearing is going to cover a lot of issues, it's been covering a lot of issues, but the core of it so far -- at least from what i've watched so far -- has been on payment for order flow and best ec cushion. and we can talk more about that, but i think it is eye heighting -- highlighting the reality that we don't have a consensus yet on really why things are uneven, and they
3:09 pm
clearly are. liz: yeah. and i'm not sure we'll get that this time. in fact, maxine waters just said she expects two more of these such hearings. gordon, let's talk about what really began all of this. keith gill, that trader, just an individual trader, he said he's a guy who grew up in massachusetts, his dad was a strive, he's self-educated, and he did not like what was happening with gamestop shares. he felt that it was overstated that this company was going under, and that hits at the heart of the short seller issue because gabe plot kin of melvin capital who is also testifying is the one who had had a huge short position and started to get hammered because of the reddit room crowd banding together. what do you glean from what's been said about all of this today so far? >> liz, so i don't think much has been said, but i think short sellers have been demonized.
3:10 pm
and by the way, we're not short sellers. i want to discuss what's happening. effectively, what happened is october of 2019 the federal reserve bank cut the intrabank lending rate to effectively zero. there was really no reason for that. when they did that, that effectively made banks' lending rates to each other free. so what you saw was an explosion in banks writing call options. so you had an explosion in outfits like robinhood, and you have call options being made available to fifth graders on fidelity because the fed effectively made that free. effectively, it's a derivative, and you're buying the right to buy significantly more stocks in the future. when you buy one stock, you buy one stock. you buy one call option, the person writing that option has to hedge that risk of riding that option -- liz: right. >> so the power of that call option is robust. and effectively what happened with gamestop is, listen,
3:11 pm
gamestop's business is not good, it's bad. they're burning cash, it's not a good -- liz: well, i don't want to get into that, gordon. what i want to get into is the fact that robinhood shut down people's ability in the middle of the night, tyler, to actually continue to buy stock. not sell it, but buy it. and that does not pass the smell test with some people. you know, basically robinhood said we need the liquidity. >> yeah, i want to address that. very simply, effectively what robinhood did is within the realm of what should be done. effectively, when a stock becomes very volatile, if you don't have enough capital on hand, you can't trade that stock anymore until you get more capital so what they did was not wrong -- liz: okay. that's true. but hold on. let me get tyler into the conversation because, tyler, you're the one who looks at discovery, you look at transparency and, you know, there is a question as to how transparent they were on their web site. there was one congressperson who
3:12 pm
said i looked on this web site -- it may have been carolyn maloney of new york, she said i looked and looked, i couldn't find anything that really explained when they can basically shut down the opportunity to buy. >> when we talk about market confidence, the idea is the regular investors wants to be able to trade when they think they can. they have an account with robinhood, they put in an order, they want to be able to buy or sell. and one of the things happened is robinhood has created a deal where they got millions of downloads and millions of new accounts, and now they have this situation that they weren't able to control which is they ended up with more trading and more volatility, and they didn't have the money. the thing that i think was most compelling about the hearing so far is the admission that that they did not have the money to make the margin call. liz: okay, yeah. and, therefore, they had to shut down. and so maybe that's where there's a hole in the system. very quickly, gordon. very quickly. >> yeah. so i just, again, i want to
3:13 pm
finish this point. so when you allow call option buying for everybody, when the fed basically cut the interest lending rates down to zero and now everybody can buy call options, you significantly increase the ability to buy stocks. what happened is you buy a stock that's heavily shorted, you buy a bunch of call options, that significantly increases your buying power and then it's called a short squeeze. we've seep it before, we saw it last year, and we're going to see it again. this isn't an issue of robinhood, they just didn't have the money. this is how the market is structured right now. liz: yeah. it is market there structure, but there's a lot more to dig into particularly the role of citadel securities and, of course, ken griffin -- who we rarely hear from -- we'll be talking more about him. >> just a minute. gordon, tyler, thank you. this morning on tiktok we got all of the overnight headlines, and we set you up for this d.c. showdown. go on tiktok dom, follow me on
3:14 pm
@redfoxliz. we garnered 300,000 views yesterday and counting. charlie gasparino's been looking into one particular detail of these hearings. you've got to hear what he's going to talk about in just a second. ♪ ♪ it's not “pretty good or nothing.” it's not “acceptable or nothing.” and it's definitely not “close enough or nothing.” mercedes-benz suvs were engineered with only one mission in mind. to be the best. in the category, in the industry... in the world. lease the gla 250 suv for just $399 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing. ♪ ♪ (upbeat music) ♪ ♪
3:15 pm
♪ ♪ ♪ ♪ ♪ ♪ (sam) gamers! he who is good for making excuses is seldom good for anything else. take fuzzywuzzy28. blamin' losses on a laggy network. only one or two. verizon 5g ultra wideband is here, the fastest 5g in the world, with ultra... low... lag! stop blaming the network and start becoming the best gamers in the ga-- that escalated quickly. (sam) 5g ultra wideband, now in parts of many cities. this is 5g built right. only from verizon.
3:16 pm
3:17 pm
liberty mutual customizes- wait... am i in one of those liberty mutual commercials where they stand in front of the statue of liberty and talk about how liberty mutual customizes your car insurance so you only pay for what you need? uhhh... yes. huh... what happens in this one? seagulls. oh, i like it. how are you doing? (seagulls sounds) only pay for what you need.
3:18 pm
♪ liberty. liberty. liberty. liberty. ♪ >> mr. plotkin, you made the pointa minute ago that you were not trying to minute stock. yet if you're short selling a stock 140%, for me on the outside looking in, it looks like that's exactly what you're doing. >> i can't speak to any people who were shorting. our systems force us to find borrowers, so we always short stocks in the context of -- [inaudible] liz: melvin capital founder and ceo gabe notkin defending his plaids in front of the house financial services committee earlier. let's get to charlie gasparino who's been reporting on the story since day one. charlie, one of the things gabe plotkin said was he really felt
3:19 pm
this was a company that had no value whatsoever which is in complete opposite opinion of the trader keith gill who who has ao testified today. >> yeah. i trust gabe plotkin over keith gill, although keith gill might have made more money on this trade in particular. liz: he did. >> the analysis on gamestop is pretty solid. i mean, it's a company that's burning cash. your last guest just explained the short thesis, and it's right there. it's what you see. the analysis for the longs is, oh, believe this company is going to be great someday. and if you put those together, this is definitely a short, not a long buy. liz: people said that about tesla, charlie. let me just say, people said that about tesla, and gabe plotkin -- >> yeah, let's not compare a company that's -- liz: charlie, all i'm saying,
3:20 pm
all i'm saying -- [inaudible conversations] for different reasons. >> listen to what i'm saying. you are comparing a company that's on the cusp of creating electric vehicles, the thing of the future, with a mall outlet that sells video games that you can buy over the internet. okay? let's just be clear here. i think that's what the short thesis -- liz: yeah. but if you talked to the shorts about tesla back then -- >> i did. liz: i'm just saying, they knew every example of what was wrong with it. >> today said tesla was close to bankruptcy, and you know who else said that? elon musk. they pointed out the problems in tesla's manufacturing and balance sheet, and he fixed it after that. remember that. the shorts -- liz: i agree. just putting it out there that that gabe also shorted tesla. >> remember, what's different about gamestop is that it is
3:21 pm
selling stuff that people -- it's not selling stuff people want to buy. tesla is selling stuff people want to buy. so just be real clear here. and the short thesis -- liz: what about the point, charlie, that tesla was is selling 25 cars a month? that's not that much. [inaudible conversations] >> that's why they almost went into bankruptcy. as the shorts said and that elon musk admits right now. so remember, the shorts played a role in making this company better. just remember that. and the shorts could play a role in making gamestop better maybe, doubtful, but that's how markets work. [laughter] two sides. my bigger point is this, and, you know, these hearings are so all over the place, i don't think -- i'm watching, i don't think we're going to get into any sort of real understanding of how markets work. and it just shows you just how much congress doesn't understand about the markets. i mean, the one guy was talking about how can you short more than 100% of a stock, more than the float?
3:22 pm
well, you do realize that one set of stock, and you could bring in gordon johnson, he'll explain this, can satisfy many shorts. it gets traded through, satisfying different shorts as it goes through different hands. one share of stock can make many more people rich depending on how they trade. that's the way markets work. if everybody's going into shorting a stock, you have to locate the stock. it takes a couple of days. once you locate it, you buy it. takes two days to do that. you can buy that stock after someone else located it and covered their short because now it's held by somebody else. these sort of concepts seem so foreign to these guys. patrick mchenry, the ranking republican, asked why can't investors invest in robinhood? well, duh. it's not a public company. liz: no, that's not what -- no, no, no, no. hold on. he said can an average investor buy a share of robinhood. you know that even though -- >> it's not a public company.
3:23 pm
liz: it isn't, but you can still -- i know people who have just bought -- >> you can't, you can't. liz: yes, you can. yes, you can. >> no,ing no, listen to me -- liz: if you are an accredited investor. >> an average investor isn't an accredited investor. why doesn't he know that? liz: exactly. but you can -- >> yeah. no, you can't. liz: hopefully, he did know that. >> no, he didn't. liz: -- can't own a piece of robinhood. >> he does not know the difference between an accredited investor and an average investor -- liz: okay. but this isn't about congress. congress we with always know is not as educated -- >> but we're talking about -- liz: you know what, actually, what did you make of robinhood and vlad tenev saying, and let me get you his quote, he said -- ken griffin, rather. he said we had no role in robinhood's decision to restrict trading, i only learned of it after it was publicly announced. >> makes total sense. why would they care? liz: right, i agree.
3:24 pm
>> they want to buy as much -- look at it this way, if ken griffin doesn't want to stop robinhood from trading, it wants more trading so it can buy the order flow, match them and make money that way. that's how they make money, paying for order flow so that robinhood can give free trading and make money. this isn't just total -- this is logic, and it's factual. by the way, one thing i think is interesting, vlad tenev talk thed about having settlement, momentarily. we have the technical know-how to do that. if you do that, if there isn't a two-day settlement, there won't be any short selling probably. if there's no short selling, all that do is help robinhood -- liz: that's a problem. >> and that's a problem. remember, he's being incredibly self-serving when he says this. he's saying, you know, instantaneous settlement, that's good for everybody, everybody can just settle their trades immediately. guess what? that means in that time, that two days' settlement time now,
3:25 pm
you can't borrow the stock and engage on short selling. that's good for his business model because his business model's about hype. laz. liz: thank you very much, charlie gasparino. when we come back, you've got to see what's happening in the electric vehicle world, speaking of tesla. today tuned, more on that. dow is down 98 points. stay restless with the icon that does the same. the rx crafted by lexus. . . .
3:26 pm
living with metastatic breast cancer means being relentless. because every day matters. and having more of them is possible with verzenio, the only one of its kind proven to help you live significantly longer when taken with fulvestrant, regardless of menopause. verzenio + fulvestrant is for hr+, her2- metastatic breast cancer that has progressed after hormone therapy. diarrhea is common, may be severe, or cause dehydration or infection. at the first sign, call your doctor, start an anti-diarrheal, and drink fluids. before taking verzenio, tell your doctor about any fever, chills, or other signs of infection. verzenio may cause low white blood cell counts, . . or if you are pregnant or nursing. every day matters.
3:27 pm
and i want more of them. ask your doctor about everyday verzenio. good morning! this is where everything started. the four way is engulfed in history. you're sitting in the place where giants ate. the four way is the heart and soul of the community. ♪
3:28 pm
3:29 pm
♪. liz: some of the pot stocks taking a beating at this hour include palantir which is headed toward a record six day losing streak as its lockup period expires. that means owl outstanding share of the enterprise software, data analytics giant will be available to trade. meaning those who got in early can now sell their shares. that increases supply of the stock. palantir down 6.7%. let's look at walmart shares. they are leading the dow downward. lower by 6% after walmart gave
3:30 pm
its outlook for the first time since the pandemic began and it was a disappointment. the retail giant expects fiscal 2022 net sales will rise in the low single digits. they reported bumper online sales during the fourth quarter but profit missed on higher covid-19 related costs. walmart also announced it will raise wages to $15 an hour. as oil prices spiked lately, currently hovering around $60 a barrel. in fact we look what is happening to the electric vehicle sector, it is trading lower. if you look at tesla, it is down just one%. nio is down 1 1/2%. workhorse is getting clipped by 2 1/2%. you look at ev related shares, candy technologies, blink technologies all being global they are all in the red this hour. there is a stock in the green in the auto sector. volkswagen. volkswagen reports are
3:31 pm
considering listing a chunk of 25% of porsche that it owns. analysts plotting the move it could boost the value of the entire vw group and raise cash for investments in, electric vehicles. volkswagen getting a bump up of 3.8%. i wonder what the tickle symbol will be poirier that? quick look at the markets. at one point today the nasdaq was down more than 200 points. it is well off those lows. now it is down just 64 points. we do have technology trying to fight its way back. s&p down 11. dow jones industrials down 79. we are continuing to monitor the house financial hearings. this is around the trading frenzy that caused a massive spike in the company and then a very precipitous fall. congressman vincent gonzalez questioned the reddit ceo on his problematic forum where all the
3:32 pm
chatter began. retail investors bonded together to start buying the stock. let's bring in two of our expert traders. gentlemen, you watched this saga unfold, kenny, you've been a long time trader. as we found citadel founder ken griffin testify will we see something like this happen in the markets again and is there anything you can really do about it? >> listen, is it possible that something like this could happen again? i guess it is but i have to tell you this has created so much buzz and so much conversation that i think a lot of things are going to change on the landscape. first of all i think people will have more of a plan b in place if they play from the short side it starts go against them much more so than some of these sort of guys that were in it clearly did not have. but i also think that the, that the hysteria that it created when the stock traded up to $450 a share. people on reddit we're going, we're buying it, we're buying
3:33 pm
it, we don't care we lose our money, we're in it for the fight. that mentality doesn't make any sense. i think in retrospect. it was a tough lesson for a lot of people to learn. in retrospect people realized how difficult investing can be especially when you go in there with no clue what is going on. liz: you know, steve huffman, the ceo of reddit has not got a lot of attention during the hearing. he was barely asked any questions. there was a point, david, he was asked what about that moment in the third week of january things went absolutely crazy in the subreddit room wall street bets? he said specifically they piled in the employees. they made sure that some people were joining this, this room they wanted to make sure there weren't any bots jumping in, there weren't any bad actors, russians, no knows, whatever, happening in there. that is about all when you talk about social media.
3:34 pm
who is the real focus here and what should it be on, david? >> liz, i think this is the age-old question we've been asking you know since the stock jobbers were working the streets around the new york stock exchange in the early 1900s. at the end of the day there is no substitute for discernment, common sense. people will be selling you stuff all the time. there are infomercials on tv. that is not illegal. they should understand the quality of the source. there should be no law people congregating on reddit doing wall street bets or no law of individual investors having their will to say in the big world of investing banding together to push stocks around the way intutions have for a long time. what is clearly revealed, liz, is reliable fundamental research. at what point do we need to pull the plug here? gamestop at 450, $500, is
3:35 pm
ridiculous. no one should be buying at that point. the fact we saw individuals beinglessly pushing the envelope too far is the real story here. liz: okay. liz: do you really stop somebody in the casino when they're losing all their money? caveat emptor. kenny, david, thank you. we have this question for everybody. who is really in control of the trades that are out there that you make? that's the question. we're posing next with the a former morgan stanley deutsche bank software programmer who helped design the trading platform. she will tell us who is in really in control of your trades. ♪ moving forward. they guide me with achievable steps that give me confidence. this is my granddaughter... she's cute like her grandpa. voya doesn't just help me get to retirement... ...they're with me all the way through it. voya. be confident to and through retirement.
3:36 pm
at t-mobile, we have a plan built just for customers 55 and up. saving 50% vs. other carriers with 2 unlimited lines for less than $30 each. call 1-800-t-mobile or go to some say this is my greatest challenge ever. but i've seen centuries of this. with a companion that powers a digital world, traded with a touch. the gold standard, so to speak ;)
3:37 pm
♪upbeat music♪
3:38 pm
transitions™ light under control. ♪upbeat music♪ transitions™ signature gen 8™ available now, in 4 vibrant style colors. transitions™ how great is it that we get to tell everybody how liberty mutual customizes your car insurance so you only pay for what you need? i mean it... uh-oh, sorry...
3:39 pm
oh... what? i'm an emu! no, buddy! only pay for what you need. ♪ liberty, liberty, liberty, liberty. ♪ ♪. >> so if you get an order from fidelity and you get an order from robinhood and you're paying for the robinhood or the flow, is that customer getting, is the robinhood getting as good of a price as the fidelity customer?
3:40 pm
mr. griffin. >> so, congressman i believe that is an excellent question. the execution quality that we can provide as measured in terms of price improvement is, heavily related or coral lated to the size of the order that we receive. so, if i were to speculate -- >> don't tell me that there are other factors involved and take us down another road. i'm asking you a clear question. >> because the robinhood order comes from a community, a community of traders who tend to trade in smaller size. >> that isn't my question, sir. you're evading my question by making up other questions. let me -- liz: there you have it. congressman getting very frustrated because he wanted a specific answer to that question. you know, hillary vaughn earlier played the end of that exchange. we wanted to play the beginning where congressman brad sherman, the chair of investor protect
3:41 pm
subcommittee, questioned ken griffin, head of hedge fund citadel and sid at that at cital securities. market makers insure a trade between a traders and a brokerage such as robinhood. we have policy analyst alexis goldstein. she developed trading platforms when she was at morgan stanley they gave to hedge funds for free in order to get business back from the hedge funds. good to have you, alexis. what is your gut reaction? is there anything specifically that popped out you during this entire hearing so far? >> i think first of all the ceo of robinhood has had a couple of places where he didn't have very good answers. there were a number of members of congress to ask you truly plan what happened, why was it that robinhood froze purchasing of certain stocks such as gamestop in late january and in
3:42 pm
my opinion he didn't give anymore information than they previously said on the blog. he sorted talked about needing to provide capital to clearinghouses is sort of way all different brokerages participate in what are called clearinghouses to manage risk. if one goes bankrupt, everybody else is in trouble too. that is it not a great answer. i suspect robinhood might not have their own internal books in order. that might have been the real answer. he cannot say that the other time he got into hot water he tried to brag how much profit the user base had, 35 billion in profits, he didn't say what percentage profits that was. that is the real number. 35 billion out of what, right? you really need to know. that is one thing that stuck out. the other thing stuck out to me i think citadel is taking heat are they essentially too big to fail in the marketplace. are they too important? that is interesting ken griffin bragged how significant they are in the marketplace which may eventually backfire for him when
3:43 pm
it comes to where congress is going to take this. liz: yeah. i do think it is important that we're learning a lot about market structure and why a trading platform such as robinhood gets paid by citadel securities, a market-maker. because in essence they get to see the volume, they get to see where traders are moving. boy was there a lot of volume in gamestop shares coming out of that reddit room with these individual investors kind of banding together. more importantly, they get better execution than their competitors, or is that really true? >> well we don't actually know and robinhood has actually gotten in trouble in the past by the securities & exchange commission, which is one of the financial regulators, for failing to give its customers what is called best execution, giving you best price or executing your trade the fastest. based on that, actually even though robinhood is commission-free, from a period of time between 2015 and 2018
3:44 pm
they cost their customers $34 million because the execution they were giving them was not best execution. >> ah. >> a lot of people are wonder about that? why is it the point representative sherman was trying to make, why citadel pay so much more for robinhood order flow than fidelity order flow? because they make more profits off the robinhood order flow. that is the question representative sherman and a lot of us have. liz: i want to be fair to ken griffin he did get a chance to be more specific. here is his answer. i have want to know if you believe it. >> we're able to give them a better price and we're able to make payments, order flow to firms like robinhood that allow them to have lower or today, in most cases no commission. and of course particular note we're able to helphood hoo, other brokers pay exchange fees to the exchanges at the time of
3:45 pm
execution. it is allowed the american retail investor to have the lowest execution cost they have ever had in the history of the u.s. financial market. stuart: okay. is that true, alexis? >> we don't necessarily know because when you use payment for order flow, the true cost of the trade is somewhat hidden. you don't hypothetically know if citadel would have given you a better price than too sigma or one of the other market makers but the regulators have the ability to look at that kind of thing and the other issue with robinhood they don't actually publish for their users what is called the information about price improvement. oh, i executed this trade at two cents better than the order you placed or five cents better. other brokerages publish that information. so it is hard to know if that is true for robinhood. it is hard to know if that is true for citadel. citadel got trouble in the past for failing to provide best
3:46 pm
execution. they should point out canada, the united kingdom prohibit this whole arrangement, payment for order flow. they think it is too confusing t makes unclear what the real price is. so i'm not sure mr. griffin didn't answer the question. liz: we have got to run, do you think they are headed that way, there is too. of a conflict of interest they will ban the practice. >> i don't know if they ban it but at a minimum allow customers to on out in an easy way. they may require brokerages to pass on the payments they receive to their customers which is a thing they could do. liz: alexis goldstein, we'll have you back, thank you very much. we are coming right back. don't go away. much more straight ahead. ♪ it's not “pretty good or nothing.” it's not “acceptable or nothing.” and it's definitely not “close enough or nothing.” mercedes-benz suvs were engineered with only one mission in mind. to be the best.
3:47 pm
in the category, in the industry... in the world. lease the gla 250 suv for just $399 a month at your local mercedes-benz dealer. mercedes-benz. the best or nothing.
3:48 pm
♪ ♪ (upbeat music) ♪ ♪ ♪ ♪ ♪ ♪ ♪ ♪ so you're a small business, or a big one. you were thriving, but then... oh. ah. okay. plan, pivot. how do you bounce back? you don't, you bounce forward,
3:49 pm
with serious and reliable internet. powered by the largest gig speed network in america. but is it secure? sure it's secure. and even if the power goes down, your connection doesn't. so how do i do this? you don't do this. we do this, together. bounce forward, with comcast business.
3:50 pm
♪. liz: all right, so with all of this drama going on in washington, d.c., what do people who have worked on wall street
3:51 pm
way back in the past, when things were so different really think? oh, we happen to have somebody. larry kudlow, who was chief economist at bear stearns back in the day. you know i really want your perspective what you have seen unfolding here as we can still put it up. it is still happening right now. >> i was there for the cottonwood tree in the 1870s. liz: i know. i know. you were on the curb. >> i don't know everything there is no know about this story but i don't think robinhood acted badly. i think there is an issue here. you have with the volumes, volatility up and down. you have to have adequate capital, those are rules from sec and exchanges. you have to deal with margin calls. i still believe robinhood acted prudently to active trading. with respect to the business
3:52 pm
about the order flow, i'm open to anything there. i'm not sure who's right, who's wrong, what i would suggest if there is an issue can be solved, ken griffin and so forth, let the exchanges solve it. don't have the federal government come in with some massive 10,000 page regulatory bill. that the is way i would play it. you know what? you want to get around all this stuff. some ways it is settlement and transaction costs here? let's go to bitcoin and blockchain. that would be only instantaneous, non-paper, non-settlement, right there at the second. you put your trade up on the register. of course no one regulates it but -- liz: with a ledger. >> put in the ledger. then run with it. but i don't really think robinhood should be decimated and attacked. i believe personally ken griffin is a very honorable man. it is washington, liz. so stock markets are out of fashion. capitalism is out of fashion.
3:53 pm
wealth creation is out of fashion. you and i are out of fashion for covering it. i mean, good heavens. liz: well, i'll tell you what, we are free-marketeers right here. >> yes. liz: the liz and larry show. >> we've done this before. liz: see you at 4:00 p.m. >> thank you. liz: eight minutes to go. >> robert o'brien, steve miller. immigration and foreign policy. thank you. >> thanks, larry. in addition as we look all that has been happening with the economy, let us go in about seven minutes we got that closing bell ringing. big banks year-to-date. they have done actually really well. however our "countdown" closer says he has got names in the banking world that aren't part of the big names out there. so stay tuned. you will get those names when we come back.
3:54 pm
your daily dashboard from fidelity -- a visual snapshot of your investments, key portfolio events, all in one place. because when it's decision time, you need decision tech. only from fidelity.
3:55 pm
i had saved up some money and then found the home of my dreams. but my home of my dreams needed some work sofi was the first lender that even offered a personal loan. i didn't even know that was an option. the personal loan let us renovate our single family house into a multi-unit home. and i get to live in this beautiful house with this beautiful kitchen and it's all thanks to sofi.
3:56 pm
3:57 pm
♪. liz: breaking news. let us show you the control room for nasa. they are celebrating. they just landed the mars rover named perseverance on the ground on the red planet. the rover launched from cape canaveral at the end of july, called perseverance. it will be the first mission on the red planet equipped with two microphones to capture any audio that might be swirling around on the planet. yeah, like, how freaked out if you be if up started to hear whispers? perseverance is not alone by the way. earlier this month both the united arab emirates and china arrived at mars in the orbit of mars. the u.a.e. with its hope or bitter and china with the tinan-1 or bitter and rover. the ufo is the one with all
3:58 pm
space stuff in it. our "countdown" closer has plays but none are on the screen here. knows are the big guys, jpmorgan, morgan stanley. 1 1/2 billion in assets under management if not for the big five, who do you like, dory? >> how are you today. liz: good, thank you. >> confidences rolls back into the sector which it clearly has in late fall, it starts in the big banks. the big banks are trading very nice. then it starts as the confidence grows it starts to move into smaller areas. however some of real estate, some real estate issues play out in the sector. it will start to show up. so i think it's a good time to hang out in some higher quality, smaller names where i can get a higher dividend than the bigger banks, have less risk because the bigger banks have more forward. liz: let me just say you like cme group, you like cullen frost
3:59 pm
and why these names along with united bank shares? is there a common thread? we have about 30 seconds left before the bell? >> risk they are cycle tested. get a nice 3 to 4% dividend. comerica bank is probably best middle market lender in the country. very sensitive to rising rates. all three of those should work really well over the next three months. liz: dory's bank plays, cullen frost, unite the bank shares, cme. thank you so much for joining us. the dow snapping a three-day winning streak but it has been a rough day for stocks, yes. we've come back certainly but the gamestop hear something entering hour five now. we have been following this. we will continue to watch it. it has been rather extraordinary i would have to say because what you're seeing here, many different parts after market that are now being cracked open just a bit so that the rest of us out there can see how things
4:00 pm
work. will there be any change? well that remains to be seen. [closing bell rings] that will do it for the claman "countdown." looks like a red day today. nasdaq hit hardest down 3/4 of a percent. it is time for "kudlow." ♪. larry, how did i, howdy, everyone, welcome to "kudlow." i'm larry kudlow. glad to be with you again. president biden announced to recommit a really flawed immigration reform plan, amnesty for some 11 million illegal immigrants in the united states. more than 10 million americans who are actually out of a job, but it goes much deeper than that. democratic bill doesn't include skills based merritt system reforms t coincides with the open borders policy of the biden white house. president biden ended the


info Stream Only

Uploaded by TV Archive on