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tv   Squawk on the Street  CNBC  February 9, 2012 9:00am-12:00pm EST

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neutral and probably positive. i think what he thinks is that the economy's going to do all right for a while. we may run into trouble in the second half. >> okay. >> byron, thank you for that. thank you, everybody, it was a lot of fun. make sure you join us tomorrow. "squawk on the street" begins right now. good morning, welcome to "squawk on the street," i'm carl quintanilla with melissa lee, david faber back at hq, we begin with some breaking news this morning. a deal among politicians in greece. apparently agreeing to an austerity package that they think would fit the ability to get a second bailout from european officials. futures have gotten a small boost off of the highs this morning, but we were in negative territory until that headline came about half an hour ago. take a look at what europe's doing, as well. they will react to this news, which by the way, ecb president mario dragi commented on in the
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headlines. and currency also getting a move on this, the euro back to $1.33 this morning, a big mover today. >> yeah, let's start with our road map for this thursday morning, and of course, we start with greece, the drama inches forward as greek politicians say they have clinched the deal on an austerity package necessary to secure a second bailout. but the question is, what happens now? >> bank of england holding steady on rates, but another 50 billion pounds to the q/e program, and the impact of the ltro is still unfolding. whole foods and newscorp gets a downgrade after the beat last night, and what's up with groupon in the first quarter of the company? pepsi cutting nearly 9,000 jobs and the ceo tells "squawk box" the company did consider breaking into two parts, decided against it. and the ipad 3, reports out this morning suggest apple will announce a new product the first week of march. when would it be available for
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purchase, though? but first, cnbc does confirm we do have a deal in greece on austerity. some of the headlines today, greek prime minister and his coalition partners have struck a deal on new cuts demanded by creditors to secure a vital 130 billion euro bailout. it will allow greece to deliver an extra 350 million euros. talking about it in his press conference a few moments ago. >> a few minutes ago, i got a call from the prime minister of greece saying that an agreement has been reached, and has been endorsed by the major parties. this afternoon, we'll be having a euro group meeting with the ministers, and we will be having a full report of the agreement and also a discussion of the depths. >> david faber back at hq, simon hobbs on the floor of the nyse.
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simon, incremental progress, a game-changer? how would you describe it? >> we have to wait to see what we get from the statement with great interest when that comes through. interesting he said they had a deal with all the major parties. my concern here would be you nailed it at the top of the show, it's an agreement between politicians that they take back toward the people and there may be discussion in that. there might be a switch from the pension demand, for example, that they cut the pensions to perhaps cutting spending, which is interesting in itself. maybe we can come back to that in a moment, carl. >> yeah, jim, as melissa and i were talking before the show, they're out of the huddle, but now at the line of scrimmage, is that how it works? >> yes, but i want to point out that last week, last thursday, he sent a note to the prime minister of greece saying, look, let's be realistic about what's happening. new uncontrollable dimension from these austerity measures. homelessness, record numbers,
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suicide, immigration, the real economy in greece as represented by the arch bishop saying, look, it ain't happening. >> austerity measures, david, they're necessary, but they're coming at a time to a point where it's really detrimentally impact any forecast for growth. >> no doubt. and that's the larger question not just for greece, melissa, but so many of these economies that are starting to really adhere to austerity budgets to try to keep the eu together so to speak and, you know. but how in the world can you get gdp growth when you're administering austerity like that? and in greece, we're seeing one test of that theory, and doesn't look like it's going to go particularly well. that's part of what has to happen here, whether it was a devaluation if they still have what they're doing now, the question is how you regain some
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growth. >> well, look, one of the things that greece has done. people at home have to recognize, you have the irs here. if you don't pay, the irs you're guilty until you're proven innocent. you've got 16 people claiming millionaires, there's a great imbalance in greece. at the same time, i do not believe that the greeks will accept any level of austerity that the politicians are agreeing to. without growth, it's going to be failed from the get go. >> as far as the marketing positioning, they believed the money would be paid in march and that's where we are. and the politicians would ultimately bend to get it past the french election. so we hold the position together and as you rightly say, jim, there may be trouble further down the line. can i give you one caveat that i think will amuse you. they keep putting up on the screen there's going to be 360 million euros of further cuts and earlier we heard the
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suggestion that that was coming from defense. throughout this whole process, at the edge has been controversy and a good deal of irony that it is believed that the french and the germans through this process have been trying to get the greek to buy their defense equipment further down the line. this is an october article in which it would suggest that the french actually wanted them to buy two to four new at a cost between 600 million to 1.2 billion euros. actually you can delay that payment for five years. so when you see up here that they're cutting the defense potentially by 300 million, it may very well be two fingers up to the french and germans when they go back to brussels midday and say we're reaching the figur figures, we're not going to cut your pensions. >> who are they at war with? who -- who are they -- why do we need them right now? >> there's the huge influx of people coming from northern africa, a huge immigration.
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interesting i read, i don't know if it's true, that greece has paid a higher percentage of the gdp in defense, second only to the united states. >> wow, 1914. you know what? where's arch duke ferd nand when you need him? look, let me back up, it's great news for the stock market, get it off the table. >> is it really great? >> it's not off the table, it's kicked past march. >> well, we've been kicking things -- if they had lowered the rates in the ecb, if they estimated -- >> the election in april. there's an election in april in greece. so they can get their money in march and this is why they want to pay the money in an escrow account so they can hold their feet to the fire. you won't have the unity after april and they'll say those cuts we agreed to, we're reneging on that, but at the moment we get past march to pay the bonds. >> you could make that argument
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about france too and whether they're going to undo all the progress we are making. >> or you could make a 2012 argument, which is what does it have to do with the priced earnings multiple of bristol-myers? that's where we are in 2012. >> did you see glaxon smith-kline. they swept it back to london. it's extraordinary they won't leave it overnight in local banks, maybe that should change. >> they should be worried less about cash management and more about growth. some of these european drug companies don't seem to have any mojo. sorry to interject that in there. >> they carved out any problems in the eu, as well. saying we'll drop the whole thing if there's any issue in the eu. so that's also kind of figures into what they're doing in terms
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of the strategy for illumina. >> simon, we'll check in with you for any developments. thanks for joining us earlier in the show. we do have breaking news with news on ford. phil? >> melissa, we've got management changes at ford. the head of local product development are both announcing their retirement from the company, replacing them will be bob shanks as cfo. raj nair has been with ford for 25 years. fairly orderly transition, just announced in a conference call with alan mullali. they've been speculated as outsiders as potential candidates to some day replace alan mulalli when we asked him time and again, does this say anything about your plans for possible retirement or leaving ford?
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he said time and again, i have no plans on retiring. again, management changes at ford. and one last note, guys, there's a new member to the ford board of directors. former utah governor and candidate for president, jon huntsman is joining the ford board of directors. >> you want to do some business in china? might not hurt to have huntsman on your board. >> the remarkable transformation, they raised money when no one else thought it would do. congratulations, mr. booth, has done a remarkable job. >> they showed it. >> and they're going to get a aaa rating. i used to sell the paper like it was treasury when i was a trader, it'll happen again. the company says it'll cut almost 9,000 jobs to save $1.5 billion over three years, the company also reporting better than expected q-4 profit today
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but forecasts a 5% drop in 2012 earnings, reporting q-4 profits of $1.2 billion, 89 cents a share, and the ceo was on "squawk" this morning. >> these people are going to come from 30 countries from across the world and it's going to be spread out. and the most important thing to keep in mind, in any one year on a net basis, pepsi co hires 10,000, 15,000 people on a net basis. and even though we're laying off 8,700 people as a company overall, that's going to be hiring people globally because they have many markets where the growth is -- >> jim, she calls the north american beverage business a work in progress. you've been vocal on that. >> this is a situation where it's basically a reset. north america has lost a lot of ground versus coca-cola. it had been that she wasn't spending enough money to be able to combat a really aggressive coca-cola.
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what she has addressed that problem, we're talking about 2012 perhaps the lost year. >> to pepsi to come from number three to make headway, it's behind coke as well as diet coke at this point. the flagship product. >> there has been a great emphasis, remember, this is a snack food company with a beverage company. there have been a lot of talks too, they break it up. i think the parts are worth less than the whole here, you need that one truck bringing both w so soda, carbonated and frito-lay. >> you like them as one piece? >> i do like them as one piece. right now executed better and i think that the plan that she's putting in place is a good one. >> david, she did say in some other form this morning, there are still some parts of the company that are good candidates for divestitures. i think grain got mentioned, aunt jamima among others. >> we want to keep this company together. she wants to completely throw out any ideas that it is being
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separate beverage and snacks than it is being together. you heard jim talking about it. that's important. she made comments to the like of emerging markets where she feels that the snack business benefits from scale of the beverage business. and those are the kinds of things she's emphasizing i think time and again this morning because there had been a lot of, you know, talk out there and chatter and frankly split-ups are not always the panacea, they don't always work. in fact, often times they don't work. in terms of ultimately creating shareholder value and by that i mean over the long-term. >> interesting, we're about to focus today on a stock down very much, dimon foods, and the situation is very drastic. mr. mendez has been on my show a number of times. watch the stock levitate. my understanding from some of the background that i work that i've done this morning that pepsi is not interested in
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pringles. so those who think that, it's not going to happen. >> yesterday after the close, diamond saying they have to restate 2010, 2011 earnings. they also say that they're -- well, they're not saying anything about the pringles bid, but there are other interested bidders out there. so a lot of experts are saying that the deal between them is all but dead. >> remember, mr. mendez, the cfo said cost. cost. this is the biggest scandal we've had this year. i have to go back to nortel to come up with a similar scandal. and a lot of analysts had said, suntrust. look, don't worry about this. people at home, accounting irregularities equals sell. a lot of time you'll get a verphone that will come back to life. >> and the reason they would be pulling out is because they're taking a lot of diamond shares
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for cash. but the short sellers here, jim, i know they get a hard time. they did a lot of work here. i remember nine months ago talking to somebody who had done an enormous amount of work and ultimately their thesis seems to have been proved correct. many of the analysts who weighed in here time and again because they're listening to management are looking not particular -- >> i asked mr. mendez repeatedly to come on the show during this period. >> didn't make your heart grow fonder? >> no, because he built this company away from walnuts, pop secret, kettle chips, starting to take real aisle share in many supermarkets. blunting some of what pepsi's doing with frito-lay, and sayona sayonara. >> kablooey. >> how do you spell that? >> i have to google it. >> by the way, the tweet question of the day is on deck.
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coming up a little later, we'll talk about some nuclear stocks, the ceo of calsters, talking some facebook. and new york giants wide receiver victor cruz is here. we'll also talk about where the ipad 3 might be announced. it's going to be interesting. before the break, though, get a talk on currency as that news out of greece breaks this morning. be right back. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing, and it lets you go in for a closer look at areas within a class or sector that may be bucking a larger trend. i'm stephen hett of fidelity investments. the etf market tracker is one more innovative reason serious investors are choosing fidelity. get 200 free trades today and explore your next investing idea.
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welcome back to "squawk on the street." and debate whether you really can put out a greece fire with liquidity. the markets definitely have an opinion here. look at intraday ten-year, we traded up to 2.05 or 2.06. it takes you back on a comp to this year, january, but the long end of the market, look at this intraday at 30. they got up close to 3.19. and if you open up the chart, that's the highest yield since about october 28. so we will continue to monitor all the issues of greece, the lower collateral that's going to be accepted by the ecb, and the notion that more q/e is going to be in the uk. all of these are going to affect the market today, but many
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thought they'd affect it larger. tweet question for today. with the house taking up the stock act today, that'll presumably shed more light on how the house members trade stocks. which inside the beltwayer you'd want to manage your money. talk to us, cnbc squawk st, we'll bring you the responses throughout the show. >> it's not really any one on that list. >> senators or representatives? >> who did the most insider trading and made money? that would be my go-to guy, right? >> there is a list, yeah. recommended fedex, maybe, and bought fedex, that's the kind of guy -- not. >> want the mad dash before the bell? cramer will get the word before the opening bell this morning and before the break, as well. futures on this thursday. don't go away. [ tom ] we invented the turbine business right here in schenectady. without the stuff that we make here, you wouldn't be able to walk in your house
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i'm carole carol epperson at the nymex. an impact here on the oil markets. oil prices up $1. we're looking at nymex crude near that $100 mark and brent coming close to $120. it's not only what is happening in greece, so, of course, the ecb leaving rates unchanged. the bank of england doing the same. and what lies ahead in terms of more q/e, that is what is moving markets, as well. higher prices for metals as we speak. back to you. >> thank you very much, carol epperson. time for cramer's mad dash.
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we haven't even touched on cisco. >> cisco trading up 85 cents when the number came over and sure enough, there's always one line that matters more than anything else, which is the growth rate. john chambers took the growth rate down and it was kind of shocking to me given the fact the momentum of the company. i think he's being too conservative. that's been his lot of late and i don't think the stock is nearly as negative. >> downgrades, by juniper. >> juniper is owned be i my charitable trust, i'd love to think that juniper is holding in there. cisco is taking some share for juniper, but juniper has a series of products that would make 2012 a stronger year. >> that's the reason they missed the most recent quarter is timing of the new product. so theoretically with the new products out, they would be able to ramp up and regain that. >> several times he's come on the show of "mad money" and have been saying, look, there is -- we've got a very big 2012 coming, it did not seem that
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chambers said he had a big 2012 coming. at the same time, there's good cloud stuff they're doing. >> oracle buying -- >> yeah. >> cloud, cloud, cloud. making a bit of a comeback. yesterday someone said is going to make the number. cloud has been in a cloud lately, maybe it's breaking through. >> you don't think it signals any kind of pause in what tech has done to the market this year? >> cisco, frankly, has been a terrific performer ever since july 28th when goldman sachs upgraded it. it's had a very good run. >> in terms of the isi downgrade, peter remembers, they upgraded the stock back in august at about $14 a share. the downgrade here, it may prove again to be well timed. oppenheimer coming up in debates. don't expect too much. so there's a lot of sort of let's talk here on the story with the big gains of the stock. >> and what stock this morning? apple. >> apple. >> raising numbers. >> going to be in the all-time high. >> reporting they have no event in february, but they have
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booked one for the first week of march. and that they think would make sense for the announcement of an ipad 3 and available for purchase the week after that. >> the ipad 3 i understand is going to have the kind of wireless you need to go on the road and use it everywhere. what can i say? i'm using $55. >> we'll see if apple opens long with the rest of the s&p 500, opening bell right after this. with our t-a-b-l-e-t?
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trade architect. td ameritrade's empowering, web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account. whole foods. whole foods. >> live from the financial capital of the world, opening bell set to ring in about 45 seconds. big story here is greece. reaching a deal on austerity, a package they think they can come to the eu with and obtain that second bailout. is that the overwhelming dynamic today? >> i know we were chatting during the break. i happen to think the banking agreement is an important component to making the banks see higher value in this market, but i have to admit, i mean, obviously greece, even though -- something tells me it's the size of a sardine can, portugal is
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next. that'll be the bubble. >> overshadowing to some extent the jobless claims number today. >> it's 2012 and i think that we're all catching up to the fact that the stock tickers here, i think greece matters only from the point of view we're not going to be talking about greece as much as we've been. >> there's the opening bell, s&p 500 at the top of your screen. at the big board, a fxall provider of foreign exchange services celebrating the ipo today. paul blackstorm from the mystery thriller "the river." nice reviews. >> yeah. >> as did our special tonight on online dating. the post review was a nice review. >> when you think of match, think of trip adviser down badly. this is one of those, by the way, trip adviser, i don't use the dating site, trip adviser, widely used product that people like and the stock doesn't deliver, groupon, a widely used product doesn't deliver.
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continual theme here, social media may not be as cool as you think. >> we talked about cisco before the break, were you surprised by the loss at groupon? >> everybody said it was a surprise loss, i wasn't looking for anything special. they ratchet up spending, take spending down, it's a confused story. you know what we need? we need a somewhat schmitt who came from sun -- we needed that. we needed that, great point. absolutely. >> acami -- >> a takeover target in the 20s, now spending online. lblt, a forgotten name, also considered to be in that same era. i'm going to emphasize that online spending super bowl, continual theme, online spending did really well. >> credit card spending not looking too bad after the mastercard numbers earlier. visa last night. >> visa, like senator durbin, you know, we're moving on from you.
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this is a continual sector theme from paper to plastic. i know most of us already have plastic in our wallets. you go overseas, they're still using papers. >> visa up 10%. >> it's incredible to me. these companies have been among the greatest performers of the year and they've been used as a proxy for banks, they're really technology companies. >> whole foods, first quarter profit up 33%. beat by 5 cents. same-store sales up 9%. >> even better, the component of same-store sales is mostly traffic, not raising price. this is so important. a lot of companies have been criticized during this period for same-store sales even better because they jacked up price. whole foods is not raising prices. the analyst community way too negative. they kind of say hohum. it's a 2012 story for multiple expansion on top of earnings expansion, stock goes much higher. >> do you think because it is a
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sailing there's positives, negatives, things i'm worried about and it where apple could go to 500, whole foods could go to 90, bank of america could go to ten, and no one really cares, ford goes to 14 in this environment over time. >> some of the skeptics say fed
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is still high on the pump, boy, bank of england today, bringing their q-e -- >> the ecb should've cut rates. you've got to give them something. you've got to take up growth in europe. i didn't like some of the german numbers yesterday, china overheating again, not going to cut rates, i think the negative here, carl, are lacking in growth for 500 million people in europe. the only part of europe that seems a little strong to me is russia, calling it out as a strong market. >> 3m, cut to hold over valuation? >> you know what? i have seen a dramatic number increase in this year of valuation downgrades that makes very little sense to me. >> remember, another theme park,
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remarkable increase in dividends and yet sells -- 10% yield, cedar fair is the play when it comes to the great american scream machine kind of activity. >> we heard from phil lebeau earlier this morning on ford. erie took looking at auto sales and what it might do. >> i think auto sales, the subtle movement here is 14 million, going to 14.5 million, maybe as high as 16, volkswagen saying watch union pacific, it's the one that's most levered to the automotives. everyone's worried about the transports not confirming the dow, carl, that's because coal is so much a railroad is coal, union pacific the winner, csx, not, norfolk southern not. >> i don't know if they're on the other side of the floor yet or not. >> we're keeping conversation when it comes to greece. the key component is we don't know what the alleged deal is at all. >> the statement is we've reached a deal. what exactly is the deal? i'll believe this deal when i see names on paper of the party leaders and the list of what exactly they have agreed to. now, remember, supposedly they've talked about cuts to the
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minimum wage and job cuts and this whole search to find $300 million additional in savings. it's very slippery. and the euro, the greek leaders have in the last few days said things like we want an agreement on exact dates and presidential election. and little things that can be thrown in here. they can't get too cute or detroit is going to say uh-uh. but there's a lot of room for slipperiness. let's just see what the paper actually says right now. did you see 21% unemployment in greece? 21%, half of all greece youth are unemployed. the social fabric of the country is being rendered, i think. >> right. >> and imagine this, the imf was negotiating with the united states to give us a loan and three months before a u.s. presidential election the imf comes to us and says, you know what? you want a loan? we want you to cut social security, we want you to cut the pensions in the united states, we want you to lay off government workers, we want cuts in the minimum wage of 25%. three months before a
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presidential election and the imf says we want the democrats and the republican parties to sign off on an agreement in writing. what do you think would happen in the united states if that happened here? would you say there'd be a few people marching in the streets? i'd say more than that. that's exactly what's going on in greece. so don't get too far away and think this is some kind of strange exercise. this is very, very serious stuff. and eventually on some level we'll be facing some of this, as well. >> i want to ask you, you said yesterday it'll be watched today and we were watching it. and what caught my eye was the comments on the ltro, how would it be similar in size in uptake? that's what i read in terms of -- >> first thing that's very important, dragi said nothing on greece. is the ecb going to help out? and you know what he said, zero, exactly what we said yesterday, because he hasn't seen a thing in writing like i was talking about. smart man, dragi, say nothing until you see something in writing. the most important thing he did today, they expanded the amount of collateral available in loans
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from the bank. i think the second take-up on the ltro, the three-year loan is going to be bigger than anyone anticipated. >> outpacing the market. >> i think so. >> he has implied he expects similar uptake. the first one was 489 billion euros. but when they're making it easier for everyone to come to the window, lower collateral requirements, less quality let's call it, i think the numbers are going to be higher. that's the bet on the street, numbers floating around of 1 trillion euros out there. so the bottom line is, i think you're going to see more on that. finally, one thing i want to say, credit suisse, trading has been horrible out there. >> melissa, thanks. i want to pick up on what bob pisani was saying. just a couple of things here. first the idea that they're rolling the collateral.
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it means you could take lesser quality paper to the european central bank and get financing for that. maybe not bad to think about in terms of the ecb becoming the bad banker creating a good bank/bad bank idea we talked about here in the early stages of this crisis. of course, it's not a purchase, it's a repo, it's with a temporary operation. so i think what we're having here is a great big three-year time-out on liquidity and on solvency in the european financial system if they take this bad paper, it's financed at the window for three years, then they have three years to get themselves in some form of better shape raising their capital, getting their books in order, their costs in line to say, okay, in three years we can take this back assuming it doesn't obviously roll off. the other thing is, i want to just reiterate what we were talking about. dragi does see this second euro financing operation to be similar in size to the last. however, he is saying, i believe, that they honor all
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collateral that's good at that window or that's acceptable at the window. so it can be any size. it can be the 500 billion euro it was or be $1 trillion. the other thing that's out there is what is the take on interest rates? he said they didn't discuss cutting interest rates but said the risk to the downside. if you look at the movement in the euro this morning, it seems to be up and down and up and down again with the idea of will dragi cut rates? i think that is out there, but he wasn't hinting at it. and the problem, guys, right now we were very good at trichet's code. we don't know dragi's code yet. there was a word or two out there if he said it, we knew it was a rate cut. we don't know what that is quite yet with mario dragi. and jobless by 15,000, david. that's not a small number. >> no, but 500 billion, maybe now -- >> long-term financing -- >> yeah. of course, it hit in mid-december, we saw it then, perhaps i've said this many
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times, we didn't appreciate how significant it might have been on the day because it really did level -- it deployed air bags, i've used that term many times, but it took off the table the idea of a systemic collapse of a financial system, which by the way we may not have been that far from in europe in terms of some of the banks going down there. that's been taken off the table now, it was seen -- and seem to be ready to have the balance sheet go through the roof. >> i wouldn't argument with pisani we need to see the deal. but if we put together what you're talking about, the idea that the ltros have been successful, they should put up the italian tenure, we're down seven, now down 5.5%. and that's the sign that you're talking about. >> they haven't necessarily gone occupant and bought as much sovereign as we thought. a lot of them putting it overnight at the ecb, the same money. many thought the ltro would actually really bring. >> well, that's the inefficiency of this. the fed goes and buys bonds and
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lowers it. the ecb finances other paper and hopes that the banks will go out and buy sovereign. some of that ends back on it. real quick, both things that happened this morning in general are towards a solution of the european crisis. >> all right. carl, back to you. >> thank you for that, let's head over to chicago, get a check on the dollar and some bonds. rick santelli at the cme. good morning, rick. >> good morning, carl. i don't know, is it just me or did any other viewers or listeners out there get a little ripple up their spine when steve liesman said the ecb's kind of playing the role of a bad bank? a central bank, one of the largest central bank is a bad bank, makes me nervous. anyway, let's concentrate on foreign exchange. all the news of the day done to the fx market? well, let's look at what's going on with the euro. as steve talked about, e yes, some volatility, traded over 1.33. how far back do you have to go? pretty much december, fresh december, highs versus the dollar. let's look at the dollar/yen.
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dollar/yen, dollar's improved. and take that chart out of it, it's only several weeks, it's not huge. but here's something a bit surprising. let's look at the pound versus the dollar on the day, up. they're talking about more q/e, wonderful. and if you open that chart up, these are fresh highs against greenback going back to november. carl quintanilla, back to you. >> thank you very much, rick santelli. let's head back to david faber. >> thanks very much, melissa. the stock looking down as much as 40% this morning after the company saying it will restate numbers and key executives saying so long. herb greenberg has been following this for us quite some time as we see, down 36.5%, excuse me, herb, what do you have? >> well, the best part of the story from my vantage point is how the industry has fallen. and perhaps the most embarrassing call you could have out of this thing came on december 9th from the key
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analyst, he had a report saying he went out, talked, he did field interviews, talking about momentum payments here to walnut growers. and they hired an accountant, a well-known accountant used to be at lehman brothers and had him out there in this report saying i believe an ongoing investigation will reveal that diamond has properly accounted for the very payments. well, the stock went up and the other news came out that the stock went down. i talked to mr. willens this morning. he said my view was on the reading of the account. the contract didn't create a liability of the company to make a momentum payment. and offline we chatted and i said, but, of course if somebody wants to pay money under the table or go beyond the contract, you're not going to know that. and that's some of the stuff that happened here. >> well, cross-eye very nature is hard to detect. >> well, this was interesting
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because of what you had. and you had such a definitive, very definitive comment from an analyst. and by the way, key bank is due a report today. they are not sending us the report. and i think that, you know -- >> key question, of course, is where we go from here. what happens with diamond foods, stock's down obviously, forget all the analysts, forget the sell side. what about new management? what about the future of the company? >> well, this is a company that did not have a lot of cash on hand. it's a company that needed to steal very, very badly. it's a company that is leaderless that frankly i've got to tell you these analysts i saw -- one analyst -- i'm not going to mention his name said there's a breakup value of $44. what they ought to do is say i want to suspend coverage, i don't know what i'm doing, there's no information. the fact they talk in a vacuum reveals the vacuous nature -- >> when you're listening to management, herb, you well know you're only going to get one side of the story. there's a place for journalists
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occasionally. >> and this story was first broken and the guy who nailed it was mark roberts on wall street who goes way back in an independent research firm in september or october and the press got ahold of it. i think what's really great about this story is it is the audit committee. this is a case where i expect to only see an audit committee do a whitewash. this audit committee probably gets an "a" plus for coming out, nailing it, no whitewash here. >> speaking of whitewash, there was a suicide on the board. we were all told that had nothing to do with anything. >> well, i took a lot of heat for reporting that suicide, jim. and, look, we don't know if it's a coincidence or not a coincidence, but it certainly happened two weeks after a very significant event occurred in this whole chain of events. >> i hate the fact there's been nothing but positive news about one of the biggest scandals i've ever seen. analysts saying everything's fine, everyone telling us don't worry, a suicide occurs on a board, people say don't worry about it. i've ever seen so much not worrying and so much loss in one
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trade. and of course, people did go to jail over sendent. >> they did. >> we'll see what happens here. well, you know, in terms of what happens here, herb, we'll put a bow around this right now. do we think this is the definitive report in terms of accounting misstatements and alike and there isn't going to be anything more? >> no, the audit committee said they're still working on the financials. so it's the old cockroach theory. you see a few come out, you don't know if there's going to be more. >> proctor & gamble, too many divisions, the company has not been run well, pringles was interval at getting this $1.5 billion sales company off the table. i don't know who the heck would want it. pepsi doesn't want it. who is going to buy pringles? multiple buyers, i'll believe it when i see it. >> all right. >> thanks, guys. meantime, number of the next
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hour is wholesale trade. and we're also getting feedback, you won't want to miss that. before the break, this morning's early movers. today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines
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"squawk on the street" on this thursday with the house picking up the stock act today that would shed more light on how members of the house would trade stocks, this morning we're asking you which inside the beltway -- which insider in the beltway you'd want managing your money today. diana tweets, best insider barney frank's priest. paul ryan because he's the only one in the government that understands finance and budgets. >> i spoke to him about the stock market, he does not understand it as much as i like him. >> i'd let eric cantor manage my
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money, he'd make sure there's some shady tax loophole to maximize my profits. and i think pelosi right now is speaking on the topic. we'll see what happens with the house today. >> i would like pelosi, she's got a fantastic stock portfolio. >> i would go with her husband who invested in the visa ipo, visa today, where is it now? up a lot. 4.5%. >> tremendous in the stock market. >> her husband would be my number one pick. >> all right. >> a lot of stocks on the move in a big way. cramer's ready to go on that. that's coming up next. optionsxpress, where you can trade your favorite products,
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back for six for 60. six stocks, 60 seconds, dollar tree issued overweight -- >> you've got to be careful with the economy getting better, people will not shop as much as dollar tree, although i've got to tell you it's a great place to shop. >> apple price target raises 665 -- >> this stock has gripped the imagination more than any other in my career. going in a straight line. >> visa posting a beat on the first quarter, jumped by 10%. >> visa, one of the best-run companies in the world. >> joy global downgraded to hold as price target cut $10 to 90.
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>> the coal used at power plants, replace it with nat gas. >> walgreen's upgraded from neutral. >> no idea with the express scripps. >> helped by growing demand for online content. >> what happened when the stock got hammered, i thought the web was strong the whole time. >> well, the stocks go to overall, even at these levels, we've come a long way in a few weeks, jim, your enthusiasm doesn't seem to be tempered all that much. >> one will always put out the worries, they're events people should be worrying about all the time, keep with israel, obviously gasoline, brent is strong. but i want to come back and say we struggle off the bad, whether it be cisco, where john chambers self-inflicted. i l thought the quarter was good. pepsi, obviously people skeptical about what's going on and we come back and focus on apple, right? and we focus on the companies
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that have a level of momentum that is just extraordinary here. do not forget, this market -- we may be focused on greece, this market is not focused on greece. >> is the next stop for apple $500? >> i think this is not an issue. i think this stock is cheap. remember, ten times earnings right here, seven times earnings back out to cash. >> tonight, pimco realty. doing incredible, should be able to refinance, they listened to ben bernanke and made you money. >> meantime, don't go anywhere, breaking news, key economic data in two minutes. stay tuned. immerse yourself in all over relief with alka seltzer plus. it's specially formulated to speed relief to every inch of you. liquidate your flu symptoms with alka seltzer plus. oh! [ baby crying ]
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today on "street signs," they're ready to build the first nuclear power plant in over 30 times. is now the time to say yes to nukes? >> inside the news moving your money, "street signs" at 2:00 eastern on cnbc. welcome back to "squawk on the street." i know you're waiting with beatbeat bated breath. since december, i would think that's going to potentially change fourth quarter gdp a bit to begin in, yes, the last friday of this month as you recall. we had that number slightly below 3%. the markets seem to be focused on what's going on with greece, what's going on with the monetary policy committee, bank of england, of course, for the uk, and the ecb. it seems as though the markets have definitely moved in directions everybody
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anticipated, higher equities, higher rates, a bit lower dollar, higher euro. higher pound, but helping that seemed a little bit light. back to you, carl. >> run through some markets here on a thursday. dell hanging on to a 45-point gain, s&p up two, the dow's been lingering around the flat line for the last couple of sessions. touch on commodities, look at crude oil, gold, of course, back up $20 to $1751, copper and euro dollar one of the big stories of the day at $133, back above $1.33 for the first seem since december. on to huge stories, cisco, earnings that beat analyst expectations. shares currently seen quite a bit of action over at the nasdaq, we'll see what cisco does to the overall market later on today, currently down 52 cents. bp reportedly in negotiations with u.s. officials to settle pollution claims related to the deepwater horizon
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spill. the government is seeking fines of up to $4,300 for each of the barrels spilled. credit card use continues to climb, also authorizing a new 500 million share repurchase program. got breaking news here out of the justice department on the expected mortgage deal. let's bring in cnbc's diana olick for the latest. diana? >> well, what we're hearing right now, we're waiting for the justice department to begin its press conference. we are told it could be a $26 billion settlement that would be announced today. but we're also being told by the california attorney general office that they're getting $18 billion of this settlement and someone there is telling us it could be as high as 39. we're still waiting for the final numbers. california's announcing they did secure an $18 billion settlement. california, of course, has one quarter of all of the mortgages in the united states. the bank signing on, of course, bank of america, citigroup,
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jpmorgan chase, and ally financial. representing half of the nation's mortgages. they have all signed on and others could, as well. now, it was down to the wire for some of the largest states again, california and new york the longest hold-ups, and who gets what? borrowers whose homes were foreclosed upon in 2008 and 2011 we're told will get up to $2,000 a piece, others behind on their mortgages will get principal write-down, that's the amount the mortgage is lowered. and again, this would be a non-zse loans, that is not fannie or freddie loans and brings up an issue of fairness. these are loans probably owned by the banks definitely serviced by these five major banks, but the talk has been that the banks would choose to do principal write-downs on the loans they hold. it's a small percentage, up to 1 million borrowers that could get principal write-down. but then you've got to think about all the potential borrowers out there.
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and we're told $26 billion that could go up to $40 billion for assistance to borrowers. so again, we do get that. that is now confirmed it could go up to $40 billion. so that makes sense now with california saying that they had gotten $18 billion out of this. it's a much larger settlement than we thought it was. and we're also told that president obama will address this a little after noon. so again, up to $40 billion in the system that is now confirmed $26 billion could lead to $40 billion. that's the largest settlement we've ever seen since, of course, a tobacco settlement in 1998 between government and industry. again, this is the big one, but going back to that fairness issue, again, the question is, who's going to get principal write-down? not going to be borrowers of fannie and freddie loans and not going to be a lot of borrowers still under water on their loans and that's going to be the talk, i'm guessing, throughout the rest. >> i'm curious as to the way this thing would work.
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some of these may be in mortg e mortgage-back securities. obviously not by fannie and freddie, but out there in packages of securities, right? >> right, and that's why we're told the bank would choose to write-down principal. because this is going to be in form of credit to the banks. that goes to the credit of this however many billion dollars up to $40 billion that the banks are going to have to pay out. so they would choose first to get the largest credits on the loans they own. now, of course -- >> on their books. >> securities are going to take a hit on that if they choose to write down principal on those. >> some have said they've already written down, they've taken that loss on their balance sheet? >> they have taken some losses, but if you're talking up to $40 billion, they haven't taken that yet. it's going to be more losses to the bank on this one. how it's going to be parked out, we're told again 18 billion going to california, it's going to be given out to different states and some of this will go not toward principal write-down,
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but toward refinances, modification of these loans. >> it's over time, correct? it's going to be over a long period of time. >> i imagine that by the time they will have some clear figures as to how much ordinary people can benefit from what's going on. stay with us if you would on the back of that mortgage settlement news up to $40 billion. one analyst making headlines saying the terms of the deal are appalling. let's bring in the man behind that, dick bove joins us from tampa, florida. $40 billion, dick? >> yeah, it's a big number, simon. the reason i think it's appalling is because let's assume that you and i buy houses side by side that are exactly the same, we pay the exact same amount of money to buy those houses, you put down $40,000, i put down $5,000, you keep making your payments on a regular basis so you've knocked down the principal another $10,000, i put down -- i'm sorry, i pay virtually nothing and the prices
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of the houses both houses being exactly the same drop by the same amount 20%, well, i still got equity -- i'm sorry, you still have equity in that house because you've been making your payments. i have no equity in that house, i'm under water because i made no payments and i didn't put any money down. so the government says you who have made your payments, saved the money for the down payment, you get nothing. me, because i made no payments because i didn't put hardly any money down, i get to see the value of my loan taken down. >> let me -- let me -- a lot of people will have great sympathy with what you're saying. let me reframe it in the way in which perhaps the president will in a couple of hours that actually through the banking system you had systemic growth in confidence, perhaps criminal negligence and after they almost brought the entire world to the knee in the barter system and then took the taxpayers and ejected them from their homes
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without the proper documentation and, actually, in many senses actually pulling the wool over the eyes of the justice system, at least short-term. >> you realize that's garbage, right? in other words, first off, the bailout that you're talking about, the taxpayer has made probably about $150 billion on the housing crisis on the financial crisis. so when you call it a bailout, if you were warren buffett, you'd put the money in and walk away $150 billion, you wouldn't be calling it a bailout. second, you're making the assumption that the guy next door who bought the house exactly the same as yours, for some reason was mentally challenged whereas you are not mentally challenged -- >> it's like tobacco, isn't it? it's the roll of the dice case and obviously the attorneys general believe that they could actually prosecute this quite successfully through the courts and that's why the banks have settled. there's a judicial case to answer here -- >> but there's a thing called equity too. did you ever think about equity?
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did you think about equity? is it fair that you who paid your mortgage, put down the down payment get nothing and that the value of your house goes down -- >> what about in the way that i'm framing it, that wrong was done here -- >> you're framing it on the basis that someone was cheated. no one was cheated. youúc" bought the house next door bought the house next door because he thought he could get away with putting down $5,000 in this example and making no payment. you know, basically the one thing -- there are two things lacking in this lawsuit which are extremely important. number one, there isn't a list of people who were taken out of their houses who were making payments. nobody's made the claim -- no attorney general has made the claim that people are being taken out of their houses who actually were making payments. the other claim that is not being made is that the banks made money on this. the banks lost a fortune on this. so in other words the banks lost a fortune, the people who were taken out of these houses were not making payments, the
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assumption that the attorney general and unfortunately you're making is that the banks should give away houses for free to people who are not going to pay for them and that the people who are making payments on houses should, in fact, bear the responsibility of subsidizing the non-payer. >> i understand the moral outrage one can feel about this settlement. at the same time, i want to bring it down to the impasse on the banks. in the past, you've been bullish on the banks. and you'd buy banks like bank of america hand over fist. what does this do in terms of your view of the banks? is it any kind of catalyst? does it help them quantify the amount of reserves they need and therefore can clear the way for a release of reserves in the future? what's the impact here? >> well, i think the impact in terms of earnings is going to be minimal because most of the big banks have set aside reserves for, you know, this payment number one. number two, you'll find that the bulk of the mortgages that are thrown into this agreement have
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already been written down and the principal has been forgiven. and since it will occur, i think, over a three-year period, it's unlikely there'll be a major earnings impact on the banks because of this. but you know, the government is already formulating another lawsuit to go after the banks at the attorney general's office and the president has set up this committee in the attorney general's office in washington just to go after banks. so to assume that there'll be a clearing of the deck of lawsuits because of this settlement would be a huge mistake. they will not be. >> would you expect given what you say, it won't impact earnings and make provisions for this, would you expect that this is potentially a major stimulus for the economy whatever the moral rights and wrongs in actually allowing those people to take down their repayment and hopefully and the mortgage, the housing mess that we're in? >> well, first of all, realize these people were not making payments on these houses in the first place. and therefore they're not getting the new flow of cash.
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they were not making payments and they're not getting anything other than the government has decided to pay everyone who cheated on their mortgages $2,000, right? the second thing is, you are going to be reducing the prices of a lot of houses in the united states where payments are being made because the house next door is seeing the principal balance on the mortgage taken down. this is not a stimulus to the united states economy. it depresses the united states economy. if you're going to do something, which is going to reduce the value of existing homes where people are making their payments. every american should stop making these payments on their mortgag mortgages, send a letter to the attorney general of his state and say i qualify to have my principal reduced because i'm not going to make any more payments on my house. that's what this -- that's what this thing is all about. >> david? >> well, yeah, listen, there's a basic unfairness here. but to your point, dick, that somehow the banks are not complicit in the fact that people were borrowing in order
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to buy those houses in the first place, i would have to take issue. i mean -- >> there's a belief that the british empire has that they had to conquer all of these countries around the world because there were child-like people in these countries that had to be educated by the british population. apparently you have the same belief about the american population. we spend a great deal of money on education in the united states to make sure that the american population has some understanding of what it does. i do not believe the average american is an uneducated fool who is easily taken advantage of by the banking industry. >> no, i'm not -- >> i believe the average american knows what he's doing, understands his finances and did this thing to buy these houses which he knew he couldn't afford -- >> and i understand the bank uses the securitization market to their full advantage knowing the people were not in a position ultimately to afford those homes. but nonetheless, gave them the loan because they knew they could repackage them yet again -- >> that's why the banks have made show much money on this thing. >> well, they did make a lot of
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money for a long period of time. and fixed income -- >> they did not make money on it, david. in other words, if they made money on it would not have -- >> enormous, enormous part of all of this profit. you're saying two different things. you're saying they lost money because they made bad loans, but the securitization engine they built up around the world, they profited enormously from. you know well that's the case. >> they did not profit enormously. >> of course they did. what are you talking about? >> i'm talking about the losses the banks have recorded. if you can show the profit they recorded -- >> ultimately, yeah, okay. if you're talking the long-term, right. because merrill lynch -- they also made an enormous amount -- >> on these loans. >> right. okay. thanks, dick. as always, a pleasure. >> we'll leave it there. and i'll part on the opportunity to defend the british empire, as well. you wouldn't have to defend american imperialism. diana, what's your take?
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>> yeah, i just want to clarify one thing we were talking about this settlement going from $26 billion to $40 billion. the reason is that the $26 billion is the five banks we talked about, the five major lenders, bank of america, wells fargo, jpmorgan chase, citi, and allied financial. the way it could go up higher to the $40 billion is if other financial institutions, and we're told nine other financial institutions, that is servicers are in talks with this settlement. if they join this settlement agreement, that's how the money could go up to that. it's still 26 for the big fiv banks. >> the speaker expected to speak around 12:15 eastern time. in the meantime, back to david faber. thyme warner reporting earnings above expectations. david's been going through the release. >> let's get to some stock action this morning, as well. pardon my back, a look at that group. all of which is down. we have heard we've gotten the earnings from the big four if you will.
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time warner, disney, news corp. -- the principle is how important buy backs have become to the performance of the stock to the questions of many of the investors in these companies ask. not just about the organic growth, but their ability to continue to reduce the slope, reduce the outstanding shares and thereby increase the earnings per share. news corp. this morning, real questions there were, at least, as we went on the call this morning about will you continue to be committed to that $5 billion buyback in fiscal year 2012 and that longer run goal of kind of reaching an appropriate level of leverage so to speak? in other words, having enough debt on your balance sheet to continue to sustain buying back that stock and having a balance sheet that accounts for how much cash flow you have and therefore levers up to a certain extent. you see it there, $2.7 billion bought back and they did, in fact, say hey, we're committed to it. time warner we heard from yesterday, $4.6 billion in 2011,
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but they've gotten near the leverage ratio. and so there is not an expectation there that you're going to see continued levels at the same level of buybacks for time warner, and viacom, you're also talking about a very large buyback again that is helping to sustain a stock price despite what has been rocky performance, certainly when it comes to the nickelodeon network, for example, no ratings declines there. you see what it has meant to that stock. you have to wonder where the growth is and where investors may be trying to find that growth. in this group that seems to rely a great deal on the buyback of shares. back to you guys. >> thanks a lot, david. when we come back, what does johnny walker have to do with new york giant victor cruz? plus breaking news on nat gas inventory. stick around. so to save some money, i just got the popular girls from the local middle school to follow me around. ew. seriously? so gross.
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about 45 minutes into trading. irobot getting hammered this morning. price cut, the price target cut to $30 from $37.50. and as you can see, it's already trading below that. dell initiated volume, $20 price target, and ingersoll rand upgraded to outperform from market perform over at wells fargo. >> groupon out with fourth quarter results last night. we put together a special remix. take a listen.
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>> get your groupon. get your groupon. get your groupon. >> this is groupon's first earnings announcement since going public last year. the online company beating on revenue, but missing on earnings, a number of active customers came short. the stock was down after hours. let's have a look at where it's open now. we're 51 minutes into trading. wow, almost 12%. mark may is analyst at barclay's capital. good morning. >> good morning. >> they can short-term manipulate whether they make profits or not by cutting back on the marketing. we've seen that. have they proven to shareholders at long-term this is a profit-making business? >> well, you know, it's always important we dig into the numbers every quarter, but took a step back, as well. 3-year-old company, third year in the business doing 2 billion in revenue run rate. and, yeah, they generated greater than expected free cash flow in the quarter and generate $250 million in cash profits for their third year of business in
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2011. i think they have started to answer that thesis, that part of the thesis. >> mark, i don't understand at all this tax trade. 113% free tax profits, this is expected to continue through 2012 if not longer. that makes no sense to me whatsoever. how does that happen? >> 7-cent impact to the bottom line tax rate. it's a young company, they're establishing an international tax at quarters in switzerland which was a couple of quarter hits that they're going to take there. that effective tax rate that you point out is also impacted by the fact that they're losing money on a gaap basis and four international start-up markets. if you peel away the onion, there's not really a smoking gun here. >> all right. but at the same time, they have less exposure in this earnings release than perhaps some of the
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metrics they disclosed in their s-1, they're not giving you an update in the quarter. the number featured merchants, total number of subscribers, does that trouble you when the company seems to be putting up more barriers in terms of the ability of analysts to actually decipher what is going on here? >> yeah, we definitely heard pushback from large investors this morning on that topic. i think that's something to pay attention to. we always prefer more disclosure than less. i think the company's motivations are one competitively not disclosing too much. and two, there's a slippery slope sometimes, investors will read too much into these metrics. and, but i agree with you. it's something we'd prefer more disclosure than less. >> yeah, we did get some transparency out of living social through the filing from amazon. when you compare the twonwo on competitive basis, does it tell you something about the groupon market? >> yeah, there's a lot of noise. we don't have a lot of time to go into all the noise of the
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disclosures in the amazon filing about living social. the underlying strength at livi living social's quite good. they grew their u.s. business in the teens sequentially in the u.s. so we actually think both companies are doing quite well on the growth basis and groupon clearly growth and the improvement in the profitability is something that's quite positive. i think they're both growing at roughly the same rate in the core u.s. market. >> we've also got transparency on your ability to perhaps limit what gets sent through, specifically the ceo that asked whether there would be a new regime, if you like. and he suggested that actually the new software will allow people to say, " please stop sending me poll dancing lessons." how does that work? >> and they certainly don't need to send me, you know, hair removal anymore.
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this company is 3 years old, they're very early in terms of improving both the consumer proposition and the merchant proposition. you'll see a lot of their investments, including several acquisitions they've done recently around improving personalization of the deals. >> can we go back to that picture? that's an extraordinary -- and i can do a plank in the gym, but that's total control for that. maybe that's something we should all aspire to. >> you have a lot of flexibility, as well. >> i do. >> anyway. >> mark, thanks for that. >> thanks for having me. breaking news on natural gas industries next. stay with us.
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♪ speaking to "squawk box" earlier today on the back of their earnings release. pepsi hosting an investor meeting in new york. our bertha coombs live outside of that meeting. bertha, good morning. >> hey, good morning, carl. pepsi did report better than expected earnings for the fourth quarter, $1.15 a share, 3 cents better. but what investors were all about were what the company's plans are for restructuring after its comprehensive review. admitted to shareholders during the meeting this morning, there are things she wished she'd done better over the last few years, including moving to boost spending on advertising more quickly and also offering better performance metrics that might have helped boost the lagging
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stock performance. but she says one of the things she had trouble with in terms of resetting the focus was the fact she has to integrate the pepsi acquisition and then change the financial downturn. now, the changes that they did outline today are all about refocusing on core brands. they're going to focus on advertising on 12 core brands, six drinks like pepsi and gatorade and snacks like chee-tos and lays. and they're going to boost their ad spending, similar to what coke announced. they're going to do that by cutting the number of agencies they work with to be more focused, and they are also going to cut costs more than 1.5 billion over the next couple of years and that's going to include a 3% workforce reduction, more than 8,500 positions. one of the things that a lot of investors are looking for was more of a restructuring along the lines of this food and beverage components.
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but noovi says that was not in the cards, and the review showed the sum of the parts is worth more when they are together. >> our estimate is that the synergies from the two businesses being together is in the range of $800 million to $1 billion. and the cost of splitting them is enormous and will create untold disruption. >> so no breakup, some investors not satisfied. as we mentioned, coke is already going to also boost about 500 million this year. it's going to be great for the advertisers, it's going to mean very big competition. as far as succession plans, nooyi says she thought about that since day one. the head of the global beverage division is stepping down and those direct reports to him will now report to the pepsi america ceo. and she says she thinks her four directs reports all are capable
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of becoming chairman and ceo if need be at any time. back to you. >> all right. thank you very much. bertha coombs. >> all right, we are keeping an eye on shares of pepsi. trading lower by about 4.25%. we just heard from bertha on the latest out of the investor meeting. let's talk about the earnings and also the strategy shifts here made by pepsi, fresh off attending the company's investor day is the senior beverage analyst over at jpmorgan. he's got an overweight rating on pepsi and a $72 price target. great to have you with us. looking at your most recent notes, seems the efforts they're making in terms of the head count reduction, exceed all of your prior estimates. are you more bullish on this turn around story at this point? >> you know, i think the real question we are coming into today with pepsi going to be serious really admitting the problems? because if you don't admit the problems, you can't fix them. that's been the problem over the past couple of years. i would say the answer comes out, yes, they are as serious as
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they need to be, and so that's the double-edged sword of the guidance. the guidance shows that they're going to go out and fix the problem, they've been under investing in north american beverages, but the other side of that is now that numbers are that much lower, you know, the multiples actually contracting today with stock down 4% given the fact that numbers will down close to 8%. not surprised at the reaction, but i think the visibility over the next couple of years is much better. >> right. >> we need to see if pepsi can actually execute it. >> john, if you can hold on, we've got breaking news on nat gas. i want to go to the nymex for the latest. >> reporter: we've watched natural gas futures fall here after the energy department did report that natural gas supplies fell by 78 billion cubic feet, that's far less than what analysts were anticipating. they were looking in the range of 84 to 88 bcf. and last year we sawi+> 42. that is causing a lot of folks
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not to use the same amount of heating demand and we already know there's plenty of natural gas around with all of the shell gas that's out there. keep in mind, though, that 240 seems to be a very key technical level here for natural gas futures, $2.40. and we have just breached that level, but have not gone below that yet. that's what traders are looking at here. the other big story in commodities is watching what is happening to oil and gold and the euro and what the reaction is to the ecb's comments about collateral rules being relaxed a bit here and what that could mean for a quasi qe-3. in the meantime, we've got more breaking news, the vote on the stock act is happening in the house. going to hampton pearson in washington. >> hi, melissa, well, the house moments ago just overwhelmingly passed its version of an insider trading ban by members of congress, the executive branch, and thousands of federal officials. now republican leaders did add a
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provision aimed at nancy pelosi that would ban lawmakers from using their positions to invest in initial public offerings. also and even more controversial change, wiped out a provision that would've required political intelligence firms to register and file disclosure reports just like lobbyists. congresswoman louise slaughter was outraged. >> all right. >> in essence what she said this waters down the bill just the way wall street wants it. and that's important because actually those were the words of republican senator charles gr grassley, stripping out that key provision, the bill goes to the conference committee to reconcile the differences between the house and senate version. >> all right. hampton pearson, thanks so much for that update. we do want to get back to our beverage analyst who has been so patiently waiting on the news line for all of this breaking
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news to pass. john, thanks so much for your cooperation here. in terms of pepsi and the turn around story, they may be extremely aggressive in setting their targets for the next few years, at the same time, they're coming off a difficult 2012 in terms of the cost of goods sold. we're seeing corn prices that could be up, sugar prices that are up, as well. how is that head wind? how strong of a head wind is that going to be in this turn around story? >> you know, it's a very strong head wind. they took. basically what they said was incremental raw material costs over and above normal inflation could take as much as 9% off of earnings. and what we're seeing across a number of these companies is, most of these companies hedged very well for 2011, and now gone out and hedged for 2012, you know, there's a big gap between those hedge levels. so, you know, we saw big increases in corn costs in particular in 2011 and that's rolling through in 2012 that got that impact on the beverage business where they used corn for sweetener as well as on the snack food business, obviously with doritos and tostitos and
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fritos. and that's a big contributor to the lower than expected numbers they're guiding for for 2012. >> this interview -- i watched her on "squawk box" this morning and she said we want a bigger share of people's stomachs, not just a portion of the day. wouldn't it be more honest in terms of refocusing the company to say, actually, we sell sugary drinks, sodas in america in the main and latin america and spicy, salty foods, we're proud of that, that's what we're going to push. that is what we do, that is the focus of pepsico. >> i think you're right. it's all a question of balance, right? you can take a look at where you want your portfolio to be 10, 15 years from now, and try to get there, but you have to manage for today. and i think that's what has been the mistake, which is they're trying to manage for where their portfolio should be 10 to 15 years from now today. and i think what we're seeing here with the greater focus on
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sort of they highlighted their key brands, we're going to see more of the focus on the, you know, more indulgent type products. i think there has been too much of an effort both through acquisitions as well as to sort of loss of operational focus on brand pepsi, brand doritos, brand chee-tos, et cetera. hopefully we're seeing that coming back. that's the message now they have to execute against that. >> and you still like pepsi over coke despite all of these head winds? >> yeah, we downgraded coke about four months ago and feeling like the expectations were too high for coke. and we're generally negative, very negative on my beverage group right now. if pepsi can hit or potentially even beat some of these lower numbers, the stock is cheap enough we can actually see some upside here. so we'd say in the context of the fact that, you know, i don't really like much in my space right now, i think pepsi offers a little more upside relative to the rest of my coverage universe. >> john, thanks so much for your time.
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and now we're in negative territory despite the news about greece. let's look at the threats of the move so far. here at the nyse, it is a broad
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when you need it. it's another reason more investors are saying... [ all ] i'm with scottrade. reporting a rise in half-year earnings, but down 20% over the last six months. shares of the diageo's stock up more than 20%. and here on "squawk on the street" is the company's ceo paul walsh, this morning from london. paul, good to see you. good morning to?0gq you. good quarter, although the cfo talks about -- and i'll put it in his words, we don't want to declare victory and say growth will accelerate as there are too many factors in the world that could impact consumer confidence. can you elaborate in the uncertainty you're seeing largely out of europe this year? >> well, first of all, we're very pleased with the numbers we've posted. 7% growth on the top line, 9% growth and a 16% increase in
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eps. so a good first half. now, what we're trying to do here is show we expect the trends to continue, but we would not advise people to assume that they will accelerate. and that's what's meant by not declaring victory. sure, europe is a tough market, in aggregate we expect it to remain flat. we're seeing good progress in the united states, the economy there seems to be progressively improving, and, of course, 40% of our business is in the emerging markets. and we've seen an 18% growth on the top line from these very dynamic, exciting markets. >> and that 40% likely to go to 50 in the next three to five years. talk about sort of the demographic shift you're seeing in emerging markets that would lead it to contribute so much to the top line. >> i would expect that 40 to move to 50% of our total
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business far faster than two to three years. but the most exciting aspects of the emerging markets is the rise of the emerging middle class. you've got a lot of people, millions of people who are becoming economically empowered, and therefore are able to access, and therefore as we look forward to those trends, we see a very attractive marketplace for our brands going forward. >> mr. walsh, a lot of people are transfixed by what they call a marketing strategy epitomized by mcdonald's here where the top and the bottom of the price range giving people a lot of choice. in contrast, you're actually cutting back your value brands. why is that? because you're becoming more of a luxury goods player and a direct response of having a cost space unless you're at the premium level is too high? >> i think broadly that's correct. we focus very much on premium
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and above. and it's interesting when you look at our performance in the first half, if you look at our ultra premium marks like johnny walker blue label, the rum, they grew 25% in this period. so the action is very much a premium and above and that's what we care to do. >> you've had some selective price increases of about 1%, mr. walsh, i'm curious as to whether or not you reached the point where you've increased prices to the full extent without consumer pushback or you see more price increases in 2012? >> i see modest price increases in 2012. but i also see with improving the economy and growing economies in the emerging markets, the opportunity to trade consumers up. not necessarily drink more, but certainly to drink at a higher price, better liquids, better
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brands. >> mr. walsh, thanks for your time. good to talk to you. paul walsh joining us from london today. straight ahead, we've got bart chilton with us to talk. and a lot more on "squawk on the street."
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"squawk on the street" this thursday, with the house taking up the stock act today, that would presumably shed more light on how members of the house trade stocks. so we're asking you today, which inside the belt wayer would you want to manage your money? one tweet, the three guys that voted against it. andrew tweets, durbin staffers who shorted visa and master card ahead of financial regulation. and another tweet, senator kerry because we know he can take a beating even at his age. and of course, they are referring, guys to the black eye he had after a hockey match a few weeks ago. when you're that age and you can still play hockey, that's not too bad. we should talk about apple, melissa, which we have been having a conversation offcamera as to whether or not a run to $500 today is out of the question. >> is within the realm of reason. the all-time high in today's session is $489.94, a gape of $12 or 2.5%. so the question is right now, i
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think it's probably not a matter of if but when at this point with the momentum behind the stock. and also the launch of the ipad 3, cowhich we mentioned there ia week the first week of march, that could be it. >> $500 within the psychological importance? >> i think psychologically important, although the past patterns of trading when it comes to apple on product launches as it runs up to the launch and sells off afterwards. so we'll have to see if that holds true once again. so no. >> and of course, we've seen some price targets. i remember one, melissa, at $666, right? >> yeah. >> and another one today at $665. >> yes. so a lot of the anlialysts are behind the stock. we'll see if it has the momentum to keep going. >> i assume you'll be covering that and a lot more? >> definitely the apple story. but also, did you know there's a new chip technology in visa and master card in europe? that could be coming here to the united states. there are plenty of trades off
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that in earlies of who makes the new card processors for that technology. we'll have that trade tonight. all three indices flirting with the flat line. if you just joined us, here's what you might have missed earlier this morning. welcome to hour three of "squawk on the street." here's what's happening so far. >> the bank of england are confirming expectations to inject an additional $50 billion pounds into the economy. >> even though we're going to be laying off 8700 people, as a company overall, we'll be hiring people globally because we have many markets that are growing. initial jobless claims dropped from 373,000 to 358,000. greek politicians have reached an austerity deal, and that may explain. >> wow. i do not believe that the greeks will accept any level of
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austerity that the politicians are agreeing to. without growth, it's going to fail from the get go. this is a snack food company with a beverage company. there has been a lot of talks do they break it up. i think the parts are worth less than the whole. you need that one truck bringing both soda, carbonated as they call it, and other things. there's the opening bell. the s&p 500 at the top of your screen. december wholesale inventories up 1% over two times the expectation. you are going to be reducing the prices of a lot of houses in the united states with payments that are being made because the house next door is seeing the principle balance on the mortgage taken down. this is not a stimulus to the united states economy. it depresses the united states economy. good thursday morning. mixed picture here at the nyse with the nasdaq higher today. a check on the markets as the dow once again doesn't want to stray too far from the flat
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line, down just 6.5 points. s&p down by 1 1/3. and the nasdaq just slightly positive. shares of the big banks pulling back from their morning highs after the announcement of the $26 billion mortgage settlement withment government. citi, jp morgan fell on the news. only bank of america stayed positive by about eight cents. some of the biggest winners today are in technology. apple as we memgntioned hittingn all-time high. akamai gaining as well. our road map today, bart chilton is here with an update on ms global and a warning to american investors. greek leaders make a deal. we'll see how the greek austerity agreement affects the european close. and then the ceo of calsters speaks out about the pension funds criticism of facebook. why he thinks the company's profits depends on diversity on the board of directors.
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and then new york giants wide receiver victor cruz will join us live to discussing what is next in his career. that's all coming up in the next 58 minutes. we begin with the greek debt deal. the prime minister and his coalition partners struck a deal on new cuts demanded by creditors. to secure the $130 billion euro bailout and, avoid default. there will be another $300 million of spending cuts. the full package must be approved by the eu, the imf, and the ecb. let's get to rick san tell we reaction to that. rick? >> there are so many things to react to, i don't want to look like i'm going crazy here. but let's start with greece. you know, obviously, stability is huge. and actions are huge. but in my opinion, for what it's worth, i think on the greek side, of course, the politicians are going to agree to things. but the people can take the
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politicians out. i think what they are doing is a good first step. but i really have my doubts whether greece is going to deliver and whether the political class is going to allow the current political class to continue to exist after some of these measures really put a crimp in what has been maybe not a free lunch but definitely the burger is cheap. now to another topic. this foreclosure agreement that's in all the papers today. you know, i tell you what, we have an education problem. not so much a mortgage problem. but let's expand on this a bit. to get $25 billion, i think if banks did something wrong, don't take it out of taxpayer pockets, go after the people that you think did something wrong. but here's my problem. gmac, rescap, ally financial doing business as, changed their name to, but let's concentrate on this one. according to the papers, the agreement will pull about $5 million from each. but are they going to be paying
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in monopoly money? because according to my records, my buddies say i understated this, but that's okay in december of '08, they took $5 billion from tarp. in may of '09, they took another $7.5 billion. in december of '09, another $3.8 billion. and granted at the end of '09 or '10, they converted about $5.5 billion into this new common equity that the government hosts. let me get this straight, okay? this wasn't a taxpayer funded bailout, is it? because people that are giving us $5 billion owe us $16.3 billion. oh, my god. >> the last topic, the ecb. mar mario drage doesn't have a very easy job. some people think he is a more straightforward speaker than his predecessor. about you what i can't get over is the collateral issue, and i understand that they need to
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like "m.a.s.h." reskrecript thed script. but if the ecb is the bad bank and they accept collateral down to 57 old tires that might make the cleanup a little easier. but does anybody worry about who comes after the ecb? does god have a central bank? back to you. >> take the tires, rick. people can come to you for some collateral. we know you have some of those in your garage. talk to you in a few minutes. time for "squawk on the beat." the stock act passed overwhelmingly in the house even after republicans introduced changes to the bill earlier this week that could have delayed its passing. hampton pierce has more on that and some complaints about it getting water the down. right you are. within the hour, the house passing its version on its ban of insider trading. the final vote, 417-2 in favor
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of the legislation. now, republican leaders added a provision that democratic leader nancy pelosi that would ban lawmakers from using their positions to invest in initial public offerings. and even more controversial change, wiped out a provision that would have required political intelligence firms to register and file disclosure reports just like lobbyists. louise slaughter one of the bill's original sponsors was outrage the outraged. >> if congress delays action, they will stay in the shadows just the way wall street likes it. >> representative slaughter was quoted senator charles grassley, a republican, and an outspoken critic. it now goes to the senate. they can decide to vote on it, but most likely they'll convene a conference committee to work out the differences between the two bills. hampton, do we know who the two were who voted against it?
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>> i have the information, but not at the top of my head. there were two republican members of congress. also by the way, if do you the math, it means about 18 members of congress did not vote at all on the bill. so they are not recorded one way or the other. >> all right. interesting bit of business getting done today on the hill. thank you for that, hampton. talk to you soon. up next, the stocks getting some fresh new highs you need to know about. and stay tuned for bart chilton. "squawk on the street" is back in just a couple of moments. rtl, which would render retirement planning unnecessary. but say the sun rises on december 22nd and you still need to retire, td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans?
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taking a look at stocks hitting a new high today, starbucks, chipotle, master card hitting all-time new highs. and then there's apple, just keeps going higher. seemingly unstoppable and growing closer and closer to $500 a share. a couple of price target moves today to $665 in one case amid
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reports that the ipad 3 might be announced at an event that the company scheduled for the first week of march. and ostensibly would be available for purchase a week after that. and we'll see if 2012 ends up being the year of the ipad 3, just like last year was the year of the ipad 2. when we come back, bart chilton with us talking about the latest on mp global and a lot more. and the close in europe only about 17 minutes away. be right back. so, i want to trade at a place that really gets who i am tdd# 1-800-345-2550 and what i need. tdd# 1-800-345-2550 and still gives me a great price. tdd# 1-800-345-2550 at charles schwab, you get everything you need tdd# 1-800-345-2550 to trade your way. tdd# 1-800-345-2550 all for $8.95 a trade. tdd# 1-800-345-2550 here, it's all about trading. tdd# 1-800-345-2550 start trading with the intuitive streetsmart edge platform tdd# 1-800-345-2550 and use its tools like strategy builder to screen for stocks, tdd# 1-800-345-2550 find opportunities faster and compare your strategies tdd# 1-800-345-2550 against other traders. tdd# 1-800-345-2550 at schwab, you also have the resources to research and trade tdd# 1-800-345-2550 across 30 countries with more than 40 stock exchanges tdd# 1-800-345-2550 around the globe. tdd# 1-800-345-2550 plus, talk strategy with dedicated trading specialists.
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more than three months after the failure of ms global, the s&p still feeling the fallout. downgrading the exchange yesterday due to risk. cft commissioner bart chilton is joining us to tell us what they are doing to bolster regulations. he is joining us with rick santelli over at the cft. and he is the author of a new book. always good to see you, bart. good morning to you. you write in one of the first things in the book, it's easy
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for folks to get frustrated by their government, and the people who work in government. i get it, and i'm also a frustrated and disappointed with how things are done. three months later, how has mf changed the way you're doing business in the government? >> well, it's been finding some circuitous money trails, carl, as we have talked about before. and, you know, there are possible and some would even say probable illegal activities that have occurred, and in my view, it's really reprehensible, revolting, and, you know, we are tracking down these money trails. job one, get the customers their money back, as much as possible. and we're shooting for 100%. but we're doing everything we can. and number two, is those that had any involvement in this that was illegal, we needed to prosecute them. and on the criminal side, that's the department of justice of course. but i hope we go forward to the fullest extent of the law.
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and put guys who took people's money away, put them away. >> that's good stuff on the punishment side. but what about the prevention side? i mean, you can't just clean up time after time after these things happen. >> that's true. and one caveat, though, carl, is that even if you look at bear stearns and you look at lehman, futures customers didn't lose any money. so this is really a one off in that this was an anomaly. but i don't want to make light of it. and i think you're right. we need to look at other things that can be done that are not an overreaction, but that are reasonable. so i suggested for example that we have an insurance fund similar to what they have in the securities world and in the banking world that would provide insurance for customers in the futures world. i have also said that we need to ensure that we have a deeper data dive to make sure that this money is there. that the segregated money of customers is always there.
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every nanosecond of every day, that it's not being used in some unlawful or inappropriate fashion during the day. >> yeah. rick? >> well, i tell you what, mr. chilton, my first question to you would be, first of all, and you said it, but i want you to resay it. after we lost literally trillions of dollars on the toxic over the counter market, how many taxpayer dollars have been lost in the futures industry since you've been following it? >> yeah. it's -- >> no, no. just what's the amount. that's all i want to know. >> i think the amount is like zero. >> ok. that's my first question. zero. my second question is, i love the way you sounded. my hat's off to you. but where were you on halloween? why did the cftc just disappear from the room and let the sec dictate policy, the type of bankruptcy, when you're supposed to be the expert regulator? >> well, i'm not sure, rick, that we disappeared from the room. that's not my understanding of what was going on.
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>> then where are these transactions that everybody seems to know except for the people that are owed $1.2 billion? >> well, if we knew all of the transactions, then we would probably be trying to prosecute people. >> i heard through great sources they have all the transactions. >> well, maybe your great sources should become regulate oars then, because we are the people charged with trying to get these people to finding the money trails and building the case. and if other people have ideas, good for them. we're the ones that are the investigators, rick. we're the ones that have to make the case in court. and ensure that when we go to court that we make the best case and get prosecutions. >> so four days, four days from basically the 26th until the 30th and 31st of october, those four days' transactions we still can't get a glimmer of transparency and it's now february 9. but here's my next question. >> hey, rick, what am i supposed to do, give you all the evidence so you can run it on tv and then bring it into court? is that how you think the
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justice system should work? >> that's the way every other branch of government seems to be working. they make a lot of noise with few facts unless it doesn't belob behoove them. i noticed this morning that the wells notices went out, and that's because the sec said they didn't give enough information on some bond deals. my next question is if the sec knew in august which many documents seem to show that the $6.3 billion position existed in mf, a primary dealer, no less, why did the august issuance of $300 million in new paper from that company not disclose that? and why doesn't the sec send themselves to wells notice? >> two things. first of all, and this little bit is going to sound like a bureaucrat. the sec is the sec. i'm not the se krervec. i can't speak to them. second, these are all issues
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that need to be looked into. i don't disagree with you at all. but the way that these things are done, you have an investigation. you develop a case. and then you go forward as you see appropriate. you don't try them in the media. that's not how you ensure that things are fixed in the right manner. i want transparency as much as you do, but i want it to be fair transparency. >> bart, you -- i'm sure you realize the danger inherent in calling ms global a one off, as you did a couple of moments ago. we have seen nfl coaches guarantee a win that did not happen. are you telling me you are 100% sure that nothing that even looks like that exists today that is still undiscovered? >> no. what i said, it hasn't happened to date. this is the first time. and, look, i feel like i'm fairly progressive on regulation. but i don't want to go overboard. i want to make sure we have an appropriate response here. and the data so far suggests that firms have done a fairly good job except for this instance.
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we have also had roughly 50 firms, these futures commission merchants, like ms global, and we have done audits on them, and everything appears to be ok. but i'm not saying that everything is golden forever. it would be foolish to say, and that's why we have regulators to try and stay on top of these things. so it's really a question of balance, carl, getting the right fix for the right problem, and then prosecuting anybody who has violated the law. but first of all, getting the customers their money back. >> your book is called "pondemonium" and it talks about how all of these things are indemic to this country right now. isn't the fact that this book can be written an indictment of regulation in this country? >> well, i actually think, carl, this is an area, ponzi scams, are really a place where you don't need more rules or regulations or laws. we're prosecuting people all the time. it's that people go under the radar, and people are taken advantage of.
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they are these sleazy swindlers that have all sorts of ways to make people think that they are entering a good deal. and as times are tough with the economy, people are sort of desperate. and so we saw one in rick's town, in chicago, last week where the guy ripped off $17 million from 1,000 people. he used $1 million of it for strippers, for restaurants, and even investing in a hollywood movie. so the crazy things that people are getting away with is not i don't think an indictment of the regulations. we've got laws. this guy is in chicago, one guy put away for 17 years another for 12 1/2 years. there's education. and that's why i wrote the book, carl. consumer education. people have to be careful with their wallet. watt out for these shysters trying to get our green every day. >> you frame it as operators who are under the radar. someone else might turn it upside down and say clearly the radar is not good enough.
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>> you can look at it either way you want, i guess. my point is that people need to be wary with their money. and there's a limit to regulation. there's a limit to rules. and finding that appropriate balance that doesn't impede business, but allows transparency as rick was talking about, finding that right balance is the key. but i encourage people to try and be careful. get educated with your money. you know, a lot of people watch this show are sophisticated investors. but even sophisticated investors were taken advantage of in the madoff scandal. so be careful. >> people who were listening to this right now know that all too well. mr. commissioner, thank you for your time. nice to see you and rick going at it as well. we'll see you later. thanks, rick a quick look now at philip morris international. in a rare mid session earnings release, the tobacco company reported profit of $1.10, a penny ahead. benefitting from higher pricing for its brands. the stock has been on an upward climb for the past six months as you can see right now at $80.24,
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up more than 3%. bells sounding in europe in a few moments. simon is sitting here studying up. we'll see how it will affect the markets in the u.s. for the afternoon session right here at home. coming up, bells are about to ring throughout europe. markets are closing. and dinners will be served. >> coca-cola. >> we'll be back with all the details. ♪ ♪ [ male announcer ] offering four distinct driving modes and lexus' dynamic handling, the next generation of lexus will not be contained. the all-new 2013 lexus gs. there's no going back. ♪
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some pretty dramatic headlines this morning regarding greece, but the markets here did not take that and run with it. two minutes to the european close. we'll bring in simon hobbs and talk about what's happened in europe and what's happening here, simon. clearly, markets are taking these headlines with a big grain of salt. >> we have new headlines breaking that i think are actually one of the most positive of the morning. perhaps per veersly, greece's deputy labor ministry is resigning to protest about the new austerity measures, according to the ap wire. so that's good news because it indicates what they have agreed is quite hard and fast in terms of the cutting as far as the greeks are concerned, and therefore may persuade in that meeting that starts in brussels in half an hour for the rest of europe. the head of the imf, the head of
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the ecb to meet greece with that $130 billion plus bailout always the austerity is good enough. let's look at where we are on the indices ahead of that. we haven't moved a lot, and that's because the market believed that greece would not default, that it would get money on march 20 by march 20 to pay those bills that are becoming due. and therefore, news over there kicking the can along the road in this way is actually kind of within the mark. let's have a look at where we are for example in the london market. the french market. there you go. so a little bit of a gain there coming towards the close. what is interesting, of course, and we have the ecb meetings, the euro hitting a two-month high. mario draghi keeping his cards close on whether the ecb would meet that black hole by writing down some of its debt. sterling not moving a huge amount today as we have the bank
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of england meeting and a announced they would boost the qe there to a staggering one quarter now cumulatively gdp. >> the european markets are closing now. >> simon, back to you. your point largely is that the package would not be credible if some big ministers in this case labor in greece were not upset about it. right? >> that is encouraging, yes. but there's also a political game going on that they seem to not like it in advance of the election in april, so bear that in mind. that doesn't mean to say we are out of the woods. there's a lot to discuss at that meeting in brussels. i think the fact that draghi is going there shows you how much there is at stake. the dutch and the germans much the dutch finance minister saying he wants to see what they are proposing. the question of whether the french and the germans are going
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to try and strip greece of further sovereignty and embarrass them by saying the money we pay you will go into an escrow account, not your national coffers, so we can still have control and ensure you do move forward. >> although to be fair, that's been one of the more extreme proposals that has been knocked down to a large degree. >> do you think it's off the table? my reading is they were still after that as a result of the merkel sarkozy summit. and the other thing of course is the ecb. there's a hole, $15 billion, $20 billion euro hold to what they originally they would pay to bail out greece, and what they need to bail out greece, and is the ecb going to make that up. we don't know if they have come to a decision on that, but i guess they probably have. i wonder if you think this is the beginning of some kind of end game. >> no. i think this is going to go on for a while. a lot of the greek union leaders are not part of the coalition. and several are calling for another strike.
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another one. tomorrow and saturday. and one of the greek union leaders said there is going to be a social uprising. around this. and 21% unemployment, the numbers leaked this morning. half of all greek youth unemployed. this is really tearing at the social fabric of the country. i think it's important to note that in addition to the fact that the greek deputy labor minister0d:ññ-wmbgb82 what the official greek statement said today, because we still don't know exactly what they have agreed to. i'm sorry, but we don't. this was the official greek statement. there is general agreement on the content of the new program. this is an english language translation. and sometimes it sounds like random word generators in a certain sense. but there's no clear understanding here if the greeks have agreed to set up an escrow account. i know simon mentioned that. i don't see any clear understanding. simon, i would ask you this. what legal recourse would they have if the new greek prime minister in april, whoever it is, simply decided that they
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weren't going to implement the terms of the agreement right now? >> well, that's presumably what they are there to discuss, how will they stagger the payments of the money and how will they ensure that happens. it is no surprise. the questions that you raise to anybody as to what might happen after the april election. but unfortunately for now, the agenda is also to just kick it down the road. past in fact the french presidential election, because if you get -- if the socialist comes to power, they want to renegotiate everything anyway. and there is a view once they renegotiate to the fiscal compact probably next year, say some certainly a senior industrialist told me on the phone today that they believe that the french under the socialist would seek to negotiate greece out quite politely from the euro zone next year. >> and the point being, good point, this is all still very slippery. so now we are dealing not with just the greece elections but
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with the french elections also potentially in april. my point is i'd like to see all three parties signature on a paper as to exactly what they have agreed to, and i think you'll find there's a lot of slippery language in all of that that doesn't necessarily hold them to a legally binding agreement. that's my point. what legal resource do they have if they abandon the principle? today we are sort of floating around. the number one comment in terms of a stock i have had today is on group on. a number of people pointed out to me as groupon went public at $20 back in early november. it's at $21 and change here. hardly a roar out of the start. we did get first quarter numbers for the first time. the most important thing about groupon, everybody says they are first out of the gate. but they have competition out there. and there are a lot of people arguing it's going to be hard for them. i heard comments this morning. we didn't get a lot of data on subscribers. i still don't know how many they have. how many groupons do they sell.
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a lot of stuff they don't tell us about. it makes it very difficult to figure out what the company is worth. but $21 when it went public at $20. >> and volume today? >> ah. that's the technical term we use down here. >> rick santelli in chicago. i don't know if you want to talk about greece. you have already done housing. and then we have b.o.e. when the quantitative easing party continues. >> it's all surreal. this is like a rod sterling market we now all operate in. with the greece thing, i liked bob's comments. i remember there used to be this big insurance expert, and he used to always create little scenes for the first day of class and he would have everybody write it up. it was something simple. and to look at how everybody in this class had a different r rendition of the facts. so what bob is saying, listen to all of the bureaucrats and you'll never get the exact details until we see the document. but more to the point, how many of us thought there was a possibility that one of the headwinds in our markets was going to be what happened with
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greece? and here i am looking at this, and we're down five on the dow. to me, so much is a bigger story than the near term. i think that the market really is looking beyond just the stability factor, and looking for more substance. but maybe that's just my interpretation. >> yeah. who knows? with levels like this, obviously you could argue either way today, rick. thank you for that. straight ahead, the california pension fund that says the makeup of facebook's board could actually hurt its profits. the ceo of calsters is with us live next. first, though, some of the wishes and lo winners and losere trading day just wrapping up in europe. uh oh. should we be letting him p-l-a-y with our t-a-b-l-e-t? [ mom ] i think it's fine. it's the new element from at&t
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coming up next on the halftime report, you'll hear straight from the analysts who upped apple's price target today to $665 as the new ipad is coming soon. and now that oracle is buying taleo, will harry ellison become king of the clouds? plus, the biggest movers. "the halftime report" is next. the second largest public pension fund in the country is
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urging facebook to make some charges. the california teachers union is asking facebook to diversify its all male board and split the role of chairman and chief executive. the ceo is joining us now. always good to see you. >> good morning. good to see you. nice sunny day here in california. >> i was out there yesterday. very nice. your letter to facebook talks about, we are disappointed the facebook board will not have any women members, and you also say a diverse board makes good business sense. is this the number one concern or is it more about the voting rights, which obviously zuckerberg has a lion's share of? >> well, there's several concerns here. i think we wanted to talk first about the diversity issue with the company, so that is why the letter focuses on that. but beyond that, it speaks not just to facebook, but to other companies that are controlled. the disparity between economic interest and ownership that control the company is glaring. and the third issue, very important to institutional
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shareholders, is that separation of the role between chairman and ceo. but i do want to say one thing first. this is a very exciting company. we're excited about the company. given their future market cap, there's no doubt this company will be present in all major institutional shareholder portfolios. so this commentary and concerns are from a desire to make the company stronger and create better value for pension funds. it's not from a harsh advsharia position. if you take the time to read the filing, one thing facebook does very well in that filing is talk about the culture of the company. the mission of the company. the connection to the customers. the things they believe in. and they describe that as you know the hacker way. and they talk about that term. and what that means is, being bold, being innovative, communicating well, learning from each other's experience. and this structure they are proposing in this filing from or
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perspective does not fit with the hacker way. >> yeah. i'm sure you realize cheryl sandberg, their coo, might be the most influential woman in american business right now. >> right. >> and to criticize the board, i wonder if you are letting the perfect be the enemy of the good. >> well, you know, again, what i would say is, not just sher ill but the entire technology industry here in california has stellar successful executives that are female. so there is certainly no shortage of directors that could broaden the diversity of this board. but we do want to make sure, you know, there is still lacking at times an understanding of the diversity issue. this is not a feel-good, be nice, california kind of perspective on something. we are relying on hard research that demonstrates that more diverse boards, not just gender diversity and not just ethnicity, but experiencial diversity, leads to better diversity, better value creation
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for shareholders. so it's an important issue. and we would hope that the company would start to look at that as they go public. >> the voting power issue is something that i think more people can get their arms around because it is so dramatic. zuckerberg's ability to control these shares, which have stronger voting rights, i think it raises a question, doesn't it, jack? he has built this thing from literally nothing in college. and here it is, this global phenomenon. >> right. >> there are going to be some who say that doesn't mean he's an operator, and there are others who will say, you have to judge him on his record, which is clearly stellar. how do you get around that? >> well, i think you get around it by saying, hey, i would be one of the complimenters of his record for sure. but when you go to the public markets and seek capital, then those expectations of the market do change. i mean, all those comments you made were absolutely appropriate for when they operated as a private company. but now becoming a public company means you're seeking capital, and shareholders expect
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some accountability for taking the risk around their capital. so that does stay on the table as an important issue. let's be honest. we just got through a pretty controversial conversation about new corporation on a comparable issue. so i think the shareholders are pretty wise to this issue when there is a mismatch between control and economic interest. that's going to be something we have to be attentive to. >> i hope you won't mind before i let you go just broadening it out a little bit and talking about expectations for the year. obviously, everyone is hunting for yield. we have seen a dramatic move in equities so far. it's only been a few weeks. are you getting the sense that what the s&p has put together and some of the numbers we're seeing in the economic data are for real? >> we do. i mean, i think there's absolutely a sense of modest change that is in the right direction. i don't know if you saw our announcement yesterday. we made a $500 million investment this week into infrastructure.
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so we are starting to think more broadly of where the opportunity is in the coming years. so, again, it's cautiously optimistic scenario. >> jack, thank you for your time. >> thanks. good to be with you. now to steve liesman this morning with breaking news. the federal judge is announcing this time its portion of the $25 million settlement with the banks on the issue of unsafe and unsound processes and practices in residential mortgaging. either $25 billion fine of that portion $766 million is the federal reserve portion. and this again is part of that $25 billion settlement that was announced, of which $175 million is bank of america, $87 is wells fargo. $275 million is jp morgan. and that includes $106 million penalty against the bank holding company and about $170 against the servicer of jp morgan, and
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that is said to be a record for the federal reserve. rounding this out, ally financial. remember, that's gmac, $207 million, that also includes a penalty against the bank holding company and the servicer. so that will settle this enforcement action brought by the fed in 2007. we are told that six other banks are not part of this overall settlement, and two thrift holding companies. so that is yet to come. obviously, this is just a piece of it, but this does show us that there are other pieces behind the banks as well, carl. >> interesting. steve, while i have you here, quick curve ball, a headline out of the a.p. in brussels, the german finance minister telling the a.p. the greek deal on spending we have been talking all morning about appears to not yet fulfill bailout conditions. we knew this wasn't going to be painless today, didn't we? >> right. so the over-under on the hours it would take for that german comment to come out was about three hours, i would say carl. so there it is right there. you heard the skepticism of everybody who said, let's see deal. we didn't know if it would
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conform, and now we are hearing that the germans are not satisfied with it. the question is, will they be able to compromise? and i think this was an expected comment, and it really remains to be seen how far they'll go and whether or not other members of the troika either pressure the germans or whether or not that is fatal to the deal here. >> steve, thank you for bringing us that and commenting on greece as well. when we come back, the salsa king of the super bowl will join us live. coming up, super bowl salsa dancer victor cruz is putting his next play in motion. he's receiving a deal from tv maker vizio. will he be yardage vizio needs to score a touchdown? cruz! we'll be right back. [ tom ] we invented the turbine business right here in schenectady. without the stuff that we make here, you wouldn't be able to walk in your house and flip on your lights. [ brad ] at ge we build turbines that power the world.
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the dow continues to hug the flat line. off briefly on comments from the german finance minister saying that the austerity package that was agreed to this morning by greek politicians does not seem to fulfill the conditions that would be necessary to secure that second bailout. but the dow managed to hang on, and it's still trading awfully close to the flatline. s&p slightly negative at 1349. been a heck of a week for
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the new york giants. they were crowned super bowl champs on sunday. received the key to new york city on tuesday. what's next? we'll have a special guest in a couple of moments with darren rovell as we await victor cruz's arrival. but some of the players now in the offseason are going to have to be revalued as we go into training camp this fall. >> yeah. and we're going to talk to victor cruz, about him getting this award from vizio, a top value performer. that me the guy makes $450,000 a year. and without victor cruz, who knows where the giants would be? the wide receiver had a breakout season. today, again, as i said he is being awarded this vizio top value performer award given to the athlete whose performance on the field outpaced their salary by the widest margin. victor, thanks so much for joining us on cnbc. you know, as i was saying, you made $450,000 this year. i know you're basking in the glow of winning the super bowl. i got that at $292 per receiving yard.
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are you concerned about being underpaid at all? >> you know, that's never my concern. my concern is just to go out there and play my game. you know, i understand what got me here. and, you know, the opportunity that has come up for me. and i'm just happy, you know, initially just to be in this league. but i understand that, you know, when you're doing well and success comes a contract. but at the time, i was just worrying about making plays for my team and doing the right things on the field. >> go ahead, carl. >> victor, you know, it's great. you're such a sweet stage of your career, because you've got -- you've proven it, right, and yet there's so much ahead. you're young. you're healthy. when you think about dream salaries or even dream endorsements, what kind of future do you want to structure? and how are you going to play it smart knowing how some nfl players end up actually squandering a big opportunity? >> yeah. i think that is part of the reason why i signed with img, such a prestigious company.
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and i think myself and working with them we're going to come up with ideas and how to just do the right deals and not just do things that i may like or that sound good or sound good to put my face out there. we're really going to work on doing the right deals that represent me as a approximate we person and my character and my personality. if i keep those things in balance and in check, i think i'll be able to have a long, prosperous career. >> and victor, that is a challenge because you can say i'll take every deal i can get right now, but at the same time you have to do the right deal. were you expecting a tostitos salsa deal or dance classes or what can we expect to see from you in the next couple of months? >> i don't know. we'll see how it goes. it's still in the early stages. we're working on a few things, a couple of things i can't talk about just yet. but there's going to be some fun things i have always wanted to do, and hopefully tostitos will be somewhere in the mix.
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>> victor, i'm sure img represents gisele. and let's go there, right? >> uh-oh. >> had she been eli's wife, what would have been your response? >> i don't know. that's a tough one, man. you can't put me in that seat right now. you can't do that to me. you know, i understand her frustrations, and i understand, you know, that being her husband, it's a touchy subject. but, you know, it is what it is. it's part of the game. everybody doesn't make every catch. and it just so happened to be one of the biggest games of the year for them. so it's tough, man. i have had some crucial drops myself this year. it wasn't in the super bowl, but i have had a pretty devastating drop early on in this season, which really took some soul searching to come back from. but i understand her frustration, and it's tough that it had to turn out that way for them. >> victor, really appreciate you being with us today. congratulations on all your success, and of course on being world champ. >> thank you very much. i appreciate it. >> thanks a lot, darren. want to get to breaking news
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this morning out of washington. once again back to hampton. >> quite a day here in washington. believe it or not, the fbi has just released a 190-page file on the late apple ceo steve jobs. this is a portion of it. it's focused on a background check interviews with jobs and others in march and april of 1991 when jobs is being considered for a presidential appointment by president george h.w. bush. when interviewed by the fbi, jobs said he had not used any illegal drugs in the past five years, but between 1970 and '74 experimented with lsd and marijuana during his college years. says he never sold drugs, abused alcohol, or had prescription drug problems. now, several individuals who were questioned by the fbi said that mr. jobs' honesty was question -- well, questioned his honesty, if you will, saying that jobs will twist the truth and distort reality to achieve his goals. however, others who were interviewed said that they believe that jobs had what it
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takes to assume a high political position within the government. again, we'll continue to go through the file and see what else is there. again, the fbi releasing an fbi file on steve jobs. back to you. >> absolutely fascinating. and goes back to what walter isaacson called his reality distortion field, in the biography. and it was talked about the fbi years earlier. thank you, hampton. don'tforget to tweet us as the stock act hits the house floor today. we want to know which beltway insider would you want to handle your money and why? answers after the break. sometimes investing opportunities are hard to spot. you have to dig a little. fidelity's etf market tracker shows you the big picture on how different asset classes are performing,
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from slips to clips. then, what commercial real estate could be signalling about the turn in the economy. cramer stakes his claim. today, 5:00 eastern on cnbc. "squawk on the tweet" for thursday. q stock act that would presumably shed more light on how members of house trade stock. which inside the belt wayer would you want managing your money? wally writes. the adviser who handles the pelosis. no doubt, darrell issa. no one works the system better. of course, the congressman is one of the wealthiest on the hill. and john tweets, none of them. it's a question of moral honesty. eventually they will short change you or steal from


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