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tv   Squawk on the Street  CNBC  April 11, 2012 9:00am-12:00pm EDT

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>> we have see many more questions. >> but we're going to have him back. make sure that you join us tomorrow, squawk on the street begins -- got a couple of seconds, right now. >> good morning and welcome to "squawk on the street" here at the new york stock exchange. powerful aftershocks following an earthquake in indonesia. here we have the s&p and the futures up by about .07. with the dax trading higher by 1.4%. we have some breaking news, a
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powerful eearthquake, a tsunami warning is in effect for most of the entire endian ocean, there are now reports of major avenue shocks as well. certainly it's -- for certain regions, but we're still so order on edge and given what we saw in 2004, everybody's a little bit worried. >> we had a big quake, a couple of other smaller ones after that, obviously let's hope there's no tsunami anywhere near this. maybe not still for parts of indonesia which has about 2,000 islands. what have you got to watch. if you take a look at where china gets its wall, let's say commodity for -- but those
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recent rumblings from indonesia, it's not fair. and you take all our -- i'll not only did you have some head winds because the viennesian government supported china, now we have to find out whether -- >> certainly there is relief at the sometime warning was -- in terms of the supply chain on the automotive sector, perhaps, the real important thing is watching the human toll, as you said brian, is not necessarily the business story at this point. >> and the people were reminded last year in japan. and it became just horrendous and i find that the reporting out of indonesia, some people feel that brick should have two is in it. i think we can't say that it's behind us because it could be
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enough bigger than we realize. >> market set to snap a five -- bonds under pressure as investors -- feeling the gains, wick alcoa. offseating weakness in europe. what's the read through for for today's markets. nokia has a primary market -- citing among other reasons, competitive industry dynamics, never good. and more on best buy, the former ceo of -- this meeks the best buy story more investable. is dow has declined for five straight sessions, we bounce off
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some key and local levels, so to break down on the upside. we took out the 50-day. bingo, this is what happened. we had southbound take out the level and that caused a lot of sector etf's to come down. i'm going to come back and i like the u.s. but i think it's an offensive to the feline, but lovers up there in -- >> didn't we just come off our best quarter in 30 years from the stock market? which mostly on cost cutting. either way -- i don't want to say it. >> i don't want to say the market drop hasn't meant
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anything, it certainly has people. but i think we have to remember also where we came from. >> that is true, but we are taking a look at some of the gains that some people are looking right now you have to wonder whether or not these gains are actually sustainable or for these particular stocks it is a time for pause. that is the smart question. >> the question i got is what happens next week? because our crack data team in cnbc described how the markets could fall, because people sell stocks to make up for the bills they didn't realize they had. so is in a tax related issue? >> david i know you have probably used your refund. this is an offset to this
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potentially. >> well, of course, as you well know, we can't buy stocks and i did speak to my accountant yesterday asking him did we get there? and palie aam going to get some relief on thursday. you guys are obviously talking about our market. started with those fed minutes in last week, it was capacitor baited from the joshes -- i'm going to go back to europe and the question, jim, ryan, melissa, is are we going to be back in that same dynamic, wherelet let's face it. we are going to be dealing with those questions about europe that day in, day out, we're going to watch spanish shield drive higher. nonetheless, that's a key question, and i know you made fun of it the other day, but for
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good reason, but it may in fact be back as an investment strategy. >> what i'm saying is that we're returning to the stock picking market where maybe high growth can be on and other stocks na related to china may be off. i want to go back to where you said that maybe you're the respector. i think things are better from the point of view they have a process. >> i do not think that banko sandera. >> we were there at the end of last year, where we really saw the banking issue teetering in europe and they came in and they saved it from massive liquidity
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injections, the 1% money for three years, they have done two programs, a industrialian euros worth. it has worked fabulously. >> jim, we're back to the solvency question, especially given spain's inability to keep our debt to gdp ratio anywhere near where they said it was going to be. so are we just going to keep having this question and conversation every day? >> i don't think so and i'll tell you why, i think because alcoa pretty much set the record straight by talking about how europe can see a negative. >> let's actually get to alcoa because those are better than expected earnings. alcoa says that it's strong for most industrial sector, they're seeing a decline in demand and
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particularly in the ought to motive industry is the same. specific will in europe, here we are in the premarket. there you are, your point right there that we can still go on and press per, even in europe this week. >> we can go over what alcoa's saying, nit's on the cover on obama tax, a junior increase in auto moative in united states, a 15 million auto bill, yes, it could be some singling gigt gets. what he's saying is, the take away of this poll is not great. but the rest of the world does have some strength in it.
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>> down the o'o'they don't get a lot of attention necessarily. but donald rose says much of the beat was on productivity gains and on costs. they had some concerns, about really how strong it was. still, pretty good beat against expectations. >> they taked tot -- the ceo could have broke larry in the sky. he took -- the a-320 and the 3-2440.
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>> we have trucks and beverage cans really good. but when he's lum nicing whole parts of the economy. what was illinois this morning. that was's recyclable glass. 75% of the lumen has been in business. there is a greening of the world. illume numb is good and glass is good. >> the in fact they're gaining through production cuts, that's actually a very good thing. t the media reaction is bidding higher, it's also going to be bowing helping the dow, because
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of that eight-year backlog on commercial aircraft. >> i completely agree with you except for the fact that they do have an eight-year backlog. where is it coming from, where's the new production going to come from? >> i think people are so embarrassed they didn't even think they were. >> don't forget china is going to have a 14.3 increase in aerospace, versus maybe 10or 11. i have watched cars here in america. >> no one really upgrades today, no one really likes the complacency of negativity. oh, yeah, if i had any, forget it. it's all done with smoke and mirrors, it's a big company saying a lot of things right. and it is saying a lot of things right. >> nokia down sharply after the
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smart phone maker found a major bug. beyond the software bug is they're issuing on the first quarter as well as the second quarter. they're saying competitive pressure that's impacting india, opensly in china, enda and the emotions markets. >> they're talking about the chinese starting to do subsi subsidies. some forces that retire. this is a stock that people have constantly tried to bottom fish and speculate. not like research in motion, just because it's $5 or $4 doesn't mean it's a party. >> you lose 100% if the company goes bankrupt. >> yes, yes you do. >> well, listen, i mean we have
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heard those conversations in terms of an destroy devices. and being able to offer those devices. >> the illuma 900. it's a 100 credit. you can do the math. i will say this about nokia when people investigate. they are the world leader in mobile phones in market share. they shipped over 100 million units.
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>> they are facing the low end of an destroy, they have problems in the whole spectrum of the problem. we're talking about the risk of the overall company. nokia may end up with a track of u.s. technology companies for years. >> we gave -- >> all i'm saying, they've got a lot of phones out there. >> it could be a nokia moment, i think it's samsung, i think it's
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apple. i'm not speculating about nokia here. >> the lumen 900 is winning out. they found that when they went in and asked specifically about the lumia 5,000. windows funny is already, but it's no iphone. >> well, what can i tell you? >> wired magazine, they're pretty much like go to on product reviews. they actually liked the lumia reviews. >> i personally and i don't mean this as an offense to microsoft or anybody else. use a -- >> kim kardashian. >> have you ever seen kim car
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dasha? that pretty much explains everyone. when i was in singapore, i was on the subway, there were five people on their phones, athaul were nokia. >> which have to get to the breaking news this morning. an 8.6 earth quake in nooefz this morning, sending after shocks throughout the country. ian williams is in bangkok this morning. >> the good news is that the pacific tsunami warning center had now cancelled the tsunami watch, the alert it had for all of the indian ocean, although some local alerts do remain in place. that e that's ---tlnl there were some
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small tsunamis created by the quake. it was a massive 8.6 quake, the middle of the afternoon indonesian time. that was followed by a couple of aftershocks, which were almost as big as the initial quake and kept those stum warnings in place and the early warning system has worked and there is a real sense of relief here. >> ian williams joining us this morning from bangkok. we appreciate it. meantime coming up, defending your portfolio against return of volatility. take another look at futures, we are poised to snap a five section losing streak, we are looking higher across the board. much more "squawk on the street" straight ahead. arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork.
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yesterday they settled at nine basis points.
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this is a good reason why on certain interest rates, moving percentage moves make 8%. short rates in germany dropped 8%. yesterday was a very important d day. let's look at the boon. yesterday, 164, all-time low yield closed. today it's up about 16 basis pointsarou s around 180. but the basis points -- i think this is very important. david favor was talking about the difference between liquidity and solvency, and that's very important on a day like today, what's also important, you talk about buying -- many will say listen, i know they're low, but maybe they'll stay low.
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that same move is starting to take over and a lot of the instruments in the euro zone. >> about eight minutes until the bell rings on wall street for what could be a very good day for kramer's mad dash. let's show up at severe vompb, so they were updating -- higher oil prices of course helping them. but yesterday u.p.s. comes out with an across the board cut today. no matter how much you think the board is going to go up. they say nat gas is so toxic. new york times has a series. all the companies are hyping their holdings, we're full section, energy, there's way too much signal gas. i do believe that the recovery in that gas is pushinged down very hard. >> multiyear pushout? >> when you have all these companies that have to go
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thrill, it doesn't matter what chesapeake cuts back, it doesn't matter -- we're not going to draw as much. there's a lot of companies that have to throw legally and that -- >> is it possible that investors are overstating the truck that we're going to see in natural gas just because there's so much conversion already that it's still going on in power plants out there from gold to natural gas. maybe we're underestimating the full story. >> i could probably go to 70. we need surface fuels to go, not gas if we're going to be able to get to any sort of the end of the bus. >> the exposure to natural gas, which runs are at risk? >> southwestern, ultrap, upl.
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these are not gas companies. >> and then the integrators are not exposure. >> chevron's got some. but these companies are organizers. >> in terms of alcoa, what does read through there, they're both container companies. largest fourth cost for glass, when the region was not owned by that, but when they're trying to figure out where to make gas, they settle on the -- that is the raw cost. meanwhile the stock is flying. >> more on that -- >> brian, over to you. >> coming up, the futures suggest that we are getting a snap back, but will it last? you've got the earthquake news, you've got the nokia news. it's four minutes away, we are
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>> it's bounced back from a five session losing streak here at the new york stock exchange. alcoa obviously very important. >> i want to go right back to apple. why apple?
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can we overdo apple? no i don't think so. that helped bring down the market. we have to watch the xpf level. we know that there was a penetration, they got to go back and then they've got to go up. >> i'm not going to say that apple is anything other than a fantastic company because you'll get kimmed if you do. 1999, microsoft had a $500 billion market nokia was one of the biggest companies in the world. >> sometimes when you seem invisible -- >> but the product cycle is completely different. what are microsoft's products back in 1999? how did they innovate, they had windows three, windows 4, windows 5. >> and that was a mobile
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revolution, have you heard of a company called insta gram? >> here we are, opening bell on wall street. transportation and logistics provider. we're looking at a lot of green here across the board, we have ibm, financials are getting off to a very strong start. bank of america, up 3%, so is morgan stanley, 3%. >> we have a goldman-sachs notion. i find that the regionals are a really great place to be. there is a gigantic distributor of kate's new holland. they reported a remarkable number last night. that's a rental company.
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people have been betting against these companies because they are risk. >> tie on the by the way is up by about 16.5%. we haven't talked about best buy. there was big news about 24 hours ago, but the developments that have happened, it's personal conduct, it had nothing to do with financial controls of the company, nothing to do with the operations of the company. one of the reasons why the investigates of the stock actually trended lower, people realize that just about three weeks ago, brian dunn had announced a bunch of restructuring. >> jim, do you believe the company needs to come out and i'm sure there's some contracts somewhere, some nondisclosure. >> wells fargo, when the cfo left there, it was not in a business situation. he was an incredible high profile. >> we did get more curve, we
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found out what happened with hewlett backer. i think if we don't know, the minneapolis star tribute had nothing on it. >> greenberg used to write for them by the way. or do we just look at their big box dee. >> they're called show rooming. barnes & noble. on and on and on and on. >> best brow, think of it like that. >> it's a show room for online retailers. that's what it is. let's be honest. >> no reason to buy it. >> goldman-sachs came out a week ago and said they're buying the quarter.
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if we are entering an area where they're getting to your home. the eyer of america 2% goods koshlgt to the paper today. don wood the incredible executive from frt has made a lot of this. it has talked about the trend in diverse indication. the ones that can go out of business, as those stocks go down. they may be a flays. tanger factory outlet.
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>> best buy in the other tenants. >> best buy leaves, but if best buy is not considered these lynch pin retailer in the mall. >> but it's going to be in a lot of these trip malls. we got a couple of these. >> you got to look at this. >> i'm destroying a different angle out. >> this is something we've actually been following for months and months and months. >> these companies are not stupid. they saw this coming. dorn woodward side this would not coming. maybe simon wants to chime in on that one. but i would point out that those that want to sell the real trust, these are some of the best return companies in
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america. they have really seen hard times. -- >> and back to best buy, my only point on nokia and rim and microsoft and maybe now best buy, there's a lot of people that look at the names they know, and they see the stock go down to a certain value. and they say, this is a big company. of course they will turn it around. >> of course. >> sprint, sprint. >> kodak. >> kodak, wow. >> pitfalls mortalized kodak. >> let's -- can we shift to dollars and bonds? >> absolutely. >> what's up? >> of course last segment, about 20 minutes ago, we taked about what was going on in the shop in europe, the ten-year in europe, the boom. now let's took at what's going
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on in our 10-year. we brought right back into that sub 2%. we have seen right back over to 2%. but we're still on the low side. every time i see us down to 2%. it seems very illogical to many traders but obviously not to investors or getting the banks that continue to stack their balance sheets with treasure ray paper. if you look at what's going on with the euro currency. everybody saying yesterday, the euro's going to,lance. nonetheless, is the market grapples with, the party line in europe. and that is, we have ltros as far as the eye can see. don't worry about the quote unquote insolvency or the
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spanish banks, 20k eastern, i think are important, we're going to have the road maybe, and we're going to have the march monthly deficit and it's going to be a whopper folks, because of the 200 billion. >> we're here and yet as you were on set yesterday which was great. i wrote a piece on -- we have another politician who is safing the market. >> he has hart of course in spanish as well as in everyth g everything. >> he reminded everybody, spain is going everything they need to do. they are pushing through an austerity program. they're getting aggressive on labor market reform. and by the way, we sthund ready
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to help them. he specifically said, remember, everybody, we have a program that we can buy bonds with, and we can use it if it's necessary. that's all he needed to say. because they do have that smp with market authority. >> a lot of akrcronyms at their exd disposal. it's only slightly smaller than citigroup. >> and the answer is, they have enough money to influence the market. now you can hear the bodies dropping, because the position is we have already done enough, it's time for these countries to step up and do what they have to do and not rely on the sugar high that they're going to get from the ecb. but obviously -- >> or the feds. >> obviously the fed is playing a slightly different game, there's a little bit of tension there, i just want to point out, that's one of the reasons we're
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seeing -- alcoa has very good numbers, and notice the transportation and aerospace strong, and great report overall since there was a lot of worry about end market and they satisfied that. let's talk about the yield, we had such a great time with the neo, now we get the analysts commentary. it was underwhelming endorsements. the stock is 25 monia 80. jeffries has a hold, a $25 price target. >> hold up for a second because i want to bring in david favor. i know he's got some i i so many
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bangs, even underwriters of the deal. when they're allowed to come out and say anything? >> it's very rare, no doubt about it. we are in a somewhat different world in terms of research at least where people can claim to be more neutral than they were in the past. >> even questions about what had been a slowing growth rate. it's something the analysts are also worried about. >> you actually brought it up. the first guy to bring it up is can you mon advertise global. you can't make a lot off global.
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>> mobile 10i67 is not as probableable as it is from your commuter, is it. >> you have to have social, you have to have mobile and but you also have to have advertising, unless you're apple, they don't meet advertising. >> and speaking of google here. >> 50% of your traffic comes from google, google searches. and that's an amazing concern.
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"john mccain -- "sqwak on the street." shoppers going to big box retailers, browsing merchandise, to buy on a separate online site later. retailers are trying to keep customers in stores, keep them buying in the stores. we're asking -- short of slashing prices, what would big box retailers have to do to get you to buy in the stores instead of from online competitors.
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"look more departmentalized, section into smaller, boutique-style stores. and remove the crowds. i'm asking for too much." jim tweets, "they have to leverage what online cannot do, and that's delivering exceptional face-to-face customer service." frank tweets, "offer bigger savings for goods and add what customers wanted like a band or car show." "either expand the online presence or go extinct." >> i think it's price. costco is price, price, price, price is what gets you in. >> nobody goes there anymore. it's too crowded. >> who said that -- >> groucho. >> the first tweet -- remove the crowds. we were talking about how nobody's going to the big box stores -- >> they don't buy. >> and this guy -- now it's a verb? i remember doing the late '90s, somebody said "i'm going mansioning." what the -- it became a verb -- >> we had a show last night --
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illumnizing. >> i'll say -- okay, for you i'm going to defend best buy. >> go ahead. >> i'm going
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. . let's get a look at what's coming up in the next big hour of squawk on the streets. simon, good morning. >> after five days of losses, we have a major reset going on in the market. we are going to the options pick, a technical view of the market. we are going to have a guy who thinks gold stocks are the place to be. quarter.formers during the first we are also going to have the ceo of zipcar. they have a special announcement moving forward. he will be aware where that stock is traded.
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back to you. >> thank you so much, simon. see you in a couple minutes. brian, over to you. >> thank you. time for six and 60 with jim cramer. let us start off with intel. >> they are going to beat the number or not. we got a beat the number call from wells fargo. up openings, don't chase, don't chase. >> we were just talking about spanish banks. deutsche bank, upgraded. >> they know what they are doing. i do believe these will be short-lived bounces. don't give up on the spanish banks. >> morgan stanley, positive on bud? >> a not cheap stock but i like sam adams which is more expensive. this is a stick it to the man. be careful. i don't think people are that careful about it. >> if you believe high oil is going to kill the consumer. you might disagree with the call on nordstrom getting app upgrade. >> if you have enough money to shop in the shoe department, dream one. >> a whole department in the mall named after you. ? really? >> netapp?
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>> be careful. this downgrade may have gravitas. >> jefflys on abbott. they just killed it. >> they are splitting in two. i think both pieces are worth more than this trade. >> who do you have on your show tonight? we were just talking about it. >> i have kelsey warren, a very high-yielding master limited partnership that nobody likes. i think it is a buy. >> very successful guy, kind of a quiet billionaire. interesting guy. >> well, remember the real estate guys were the quiet billionaires. now, it is these oil guys. we had so much of it in this country. >> maybe he should start instagram 2 with his money. >> dirkson? >> we have some breaking news on apple. you might have seen it at the bottom of your screen. apple and book push lishers are being sued by the department of
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justice over possibly colluding ov over e book pricing. subject of a lawsuit by the doj along with e-book publishers. another big hour of squawk on the streets. the mashrkets are sharply highe. we also have the ceo of zip card and much more. stay tuned. zap technology. arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz.
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departure. hertz gold plus rewards also offers ereturn-- our fastest way to return your car. just note your mileage and zap ! you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz.
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welcome to the second hour of "squawk on the street." let's get to the road map. after full-on rebound mode, if shades of 2011 persist, what is next for the marquettes? barton biggs gives us his take in a moment. gold getting a bid. have we seen the bottom? bank of america getting a
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big boost. is there more room to run? we will talk to the analyst behind the call. honda announcing it is providing hybrids to zipcar. we will sit down with the ceo, scott griffith. they are announcing they will sell their wilson international distribution unit to national oil well varco for an undisclosed amount. national oil well looking to tap into new market opportunities clearly with that deal. >> the world's biggest maker of glass bottles, they are expecting first quarter earnings to rise more than 35% from a year earlier. greater than planned production rates. first quarter results on april 25th. the stock is higher by more than 8%. >> perhaps the most important story of the day in terms of the market action, the price action we are seeing so far from the euro zone, ecb executive board member benoi kure says they
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could restart bond prices for spain. he says they don't reflect the spanish economy. the euro has risen as a result and indeed bond yields are back down across the board. most notably in spain and italy itself. it is why the banks are higher in europe and why we got such a good lead on the futures coming into trade. that's the man, french and new to the ecb board. in charge of market operations and i think this is the era of of jawboning. he has the power to make a difference. >> your point, the gains we are seeing in deutsche bank. we are seeing some gains early on from the banks that take their lead from europe, morgan stanley, citi and bank of america. they are usually higher by 2.5.
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>> we got an upgrade today from hsbc on europe banks. we also had an upgreat on barclays as a result from a different house as a result of their holding in black rock. we will come back to that. breaking news out of asia. we want to get to that. we want to go to our reporter for the very latest on what is going on in indonesia. cnbc's chloe cho is in singapore. >> i think the real risk of danger has really passed. this only happened in the past hour or so ago. countries one by one from sri lanka and indonesia, lifting their tsunami alerts. the u.s. pacific tsunami has canceled their warning. whatever are in place seems localized to some of the small islands, about 2.5 hours ride in
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terms of from the capital, jakarta. the powerful earthquake and tremors that followed in the aftermath of the first 8.6 magnitude earthquake seems to have quite a bit of an impact given that we hear that countries in africa as far away as tanzania and kenya are still in a tsunami warning as well. remember, these countries are on the other side of the indian ocean along the eastern african coast and they too were affected by the 2004 tsunami. perhaps these warnings could be lifted. it might be a result of the time lag. in terms of the market impact, it really didn't do much of the asian session, given that these events only unfolded after the jakarta composite had closed as well. no major industrial complexes damaged in banda acha as well as state oil giants seeing all of the gas and oil facilities unaffected. it looks like the market impact will be minimal.
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>> thanks a lot for that update. getting back to the market, stocks staging a rebound after the worst selloff in 2012. our next guest says we are halfway through what will be seen. barton big gcgs is with us now. a lot of investors that have endured thes la the five trading sessions which ask you, halfway, halfway in terms of time span? >> no, halfway in terms of the mentions of the decline. my view is that it is a pullback. it is not the beginning of a new bear market or the beginning of something like last summer but we are in a pullback. we are halfway to two-thirds of the way. we were halfway to two-thirds of the way through it as of the
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close yesterday. i just don't think that the news from europe today is very encouraging. in fact, i think it is discouraging. the fact that the european central bank and the fsf and the markets have rallied, because they have started to say they will buy bonds from the countries again, that's not good. that's bad. that's artificial stimulation of the fixed income markets. it is not good that the precious firewall of 800 billion euros that is built up is already starting to be spent. the german auction sales is pretty shocking and it is pretty shocking that the italian
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option, one-year bills a month ago went for 1.40. this time went for 2.04. >> a lot of europeans thought it might be a lot worse. we have seen a lot of the italian banks rally strongly back. mr. biggs, let me ask you what you are doing in the market. you had gone very long, up to about 90%, mainly on u.s. stocks. what are you doing now? >> you didn't hear what i said. i said the previous time i was on a program like this. i cut back some. i am cutting back further today in europe with this strength. my net long is down to about 65, something like that. 65%. >> as a believer, barton, that this is a correction and that it
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has a finite amount of time to go, i would imagine that there is opportunities as well. so where are you cutting back specifically? where might you be looking for opportunities on the pullback? >> i believe in my basic long positions but i believe that the s&p is very data dependent here over the next two or three weeks in terms of whether the u.s. economy is still in a moderate uptrend or whether it has really gotten soggy. certainly, the most recent high frequency data suggests it is a little bit soggy. it is data dependant. i have really eliminated my positions in italian stocks.
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i am selling short positions in -- france and in germany. i think both of them are vulnerable here if this correction in europe continues. i think it will. >> it's great to speak with you. thanks for your time. our next guest thinks you should be buying gold. in fact, three gold stocks. frank holmes the ceo of u.s. gold investors will join us after the break. stay with us. [ male announcer ] citi turns 200 this year. in that time there've been some good days. and some difficult ones.
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we are waiting president obama to address the press. about the buffett's rule about millionaires paying one-third of their income. he is going to bring with him some millionaires and their secretaries. you will recall that buffett said it was wrong he should pay more than his secretary. >> sounds like a gimmick, doesn't it? stocks to watch, about 45
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minutes into trading. metlife upgraded from raymond james. we are seeing that stock higher by 1.5%. shares of travelzoo your surging. the company is planning to put itself up for sale. it is in the process of hiring a financial adviser. that's up about 28% right now. initiated by btig with an $11 price started higher by 4.5%. gold stocks, an appalling performer recently. however, it is worth pointing out that on comex, it has had a good run, up more than 450% in the decade. the environment has been somewhat challenging. our next guest expects gold to continue to thrive. frank holmes is the ceo and cio of u.s. global investors. good morning. >> good morning. >> i guess the first quarter has taught us all one thing, that gold just doesn't go in one direction. >> absolutely. what's really interesting, over the past ten years, the 12-month
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volatility rolling every day is quite different when people think about it, gold versus the s&p. the s&p is plus or minus 19%. gold is only 13%. gold is, in fact, less volatile than the s&p 500. >> interesting. in terms of where it goes next, do you need to have massive amounts of liquidity, further liquidity pumped in from central banks to keep it up there? in other words, if they stop pumping, would it continue to drift lower? >> well, i think there are two factors to consider. i have characterized them as the love trade and the fear trade. the fear trade relates to the monetary base. gold has been running at ruffle two times the monetary base. this year, europe, america, and japan are going to roll over $8 trillion in short-term three-year notes below the inflationary rate. this has always basically been a strong support for the price of gold for those people worried about the currency losing their valuation long-term.
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the love trade takes place predominantly in asia where people buy gold for holidays. the seasonal pattern is january, february, with chinese new year. it is up, falls in march. that's what it did this year. it got exaggerated because there is a strike in india over new tax and gold jewelry. we are going to have the hindu holidays at the end of april. you can see demand coming from the love trade. >> frank, from this point on, do you see more upside in gold or gold miners? typically gold miners have more leverage to the upside when gold is on the rise and more to the down side for that matter? >> absolutely. gold stocks have lagged on a relative base to bouillon. on takeovers, the premiums are so much greater because of the inherent discount of stocks being sold down relative to god prices in cash flow. the stocks that we like have dividends. they have been increasing their difficult vends. companies like franco, nevada,
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have a monthly dividend higher than a two-year government note, a risch balance sheet of cash and it gets royalties from all over the world in its gold mines. >> i appreciate that you are very bound up with gold. some of these stocks you are recommending, gold has been an appalling performer, down 14% year to date. there is an opportunity cost in sitting in gold. you can't put your wealth into other areas of the market at this stage you might think are perhaps more exciting. >> it rotates around. i don't understand the question, actually. gold is an asset class. it should be 5%, 10% your waiting and rebalance. with that, there are gold stocks and bullion. we get where gold bullion will outperform gold stocks and the opposite. you should remain 10% in an overall portfolio. that has served you very well by maintaining that 10% ratio. >> thank you very much for the
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advice. frank holmes from u.s. global investors. sdil to come, breaking news on crude oil and the eighth straight session rise. what is the trade on the volatility as european worries creek back into the markets? back in two. in his first business interview in years. i counted, is this nine lawsuits? >> that's a testimony for my success, that i'm a target for baseless lawsuits. >> your real name is gary. how much more marketable are you as bubba, do you think? >> gary is boring. >> fear is back into the market with the dow down 213 points. today, we had the worst one-day point decline so far this year? ♪ [ male announcer ] the 2012 m-class
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welcome back to squawk on the street. we are waiting on president barack obama to give remarks on the buffett rule. we saw the president giving a fiery campaign style speech. this will be a much different setting. he is at the old executive office building at the white house complex and will be appearing with millionaires and
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their secretaries in the room with him to emphasize the point that the president has been making that often times, the super rich pay a lower rate of taxes than their assistants and people in the middle class. we don't have a list yet of who these millionaires are. it will be very interesting to see who appears at the president's side at this event. we can be assured that warren buffett is not here. don't look for him. clearly, some millionaires that support the president's idea on taxing those people that make more than $1 million a year to at least 30%. >> we had a big event that came through with the same message. is this a conscious effort on the part of the white house and the democrats now that we know that romney is likely to be the republican nominee, to advance the campaign and get in his face before he is able to regroup in a sense? >> this is clearly political and
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designed to draw a contrast between president barack obama and mitt romney. you have had some of obama's support rs and advisers out there talking about mitt romney having a swiss bank account. they want to drive a contrast here suggesting that obama is on the side of the middle class and that romney stands with the rich, the million naeaires and billionaires. we are seeing a strong populist tone coming out of this white house. it is a pivot towards the general election and a chance to make the contrast very early. you don't want to let a day or two go by when you are not defining your opposition in this so-fast media culture. >> today's speech is part of a drumbeat that the president is staging on the buffett rules yesterday, today at the white house and vice president biden tomorrow in new hampshire. do you have a sense of what the times was? a very good point in terms of
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santorum dropping out late afternoon and this perhaps being a late-minute add to the schedule. we didn't have any indication this cass coming up or a list of the folks in the room with the president today, suggesting possibly that this was put together fairly quickly. usually, we do have some advance heads-up on who is going to be appearing alongside the president before the event starts. that leaves us a little air of mystery. it gives you a sense that they are finding political opportunity and timing. >> there is whitney tillson walking. >> and a cnbc contributor. >> just on fast money this week. there he is standing all the way to your left and you look at the screen in the blue shirt. >> his secretary next to him then if that's the idea. >> her watching and trying to figure out who is who here in terms of supporters of the president as well as this new tax, which is estimated to raise
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$47 billion over ten years. >> i have always admired the way they position people behind where the president will be. >> ladies and gentlemen, the president of the united states. >> here is the president. so let's listen in. >> thank you. everybody please have a seat. thank you. it is wonderful to see you, especially you. oh, man, i know. having to listen to a speech, yes. anyway, good morning, everybody. it is wonderful to see you. lately, we have been talking about the fundamental choice that we face as a country. we can settle for an economy where a shrinking number of people do very, very well and everybody else is struggle to get by or we can build an economy where we are rewarding hard work and responsibility, an
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economy where everybody has a fair shot. everybody is doing their fair share, everybody is playing by the same set of rules. the people who have joined me here today are extremely successful. they have created jobs and opportunities for thousands of americans. they are rightly proud of their success. they love the country that made their success possible and most importantly, they want to make sure that the next generation, people coming up behind them, have the same opportunities that they had. they understand, for some time now, when compared to the middle class, they haven't been asked to do their fair share. they are here because they believe there its something deeply wrong and irresponsible about that. at a time when the share of national income flowing to the top 1% of people in this country has climbed to levels we haven't seen since the 1920s, these same
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folks are paying taxes at one of the lowest rates in 50 years. one in four pays a lower tax rate than millions of hard-working middle class households. while many do pay their fair share, some take advantage of loopholes and shelters that let them get away with paying no income taxes whatsoever. that's all perfectly legal under the system we have. you have heard that my friend, warren buffett who pays a lower rate than his secretary. he has been pointing it out and saying we should fix it. the executives we have here today, behind me and in the audience, they agree with me, this should be fixed. they have brought some of their own assistants to prove that same point. it is plain wrong that middle class americans pay a higher
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share of their income in taxes than some millionaires and billionaires. it is not that these folks are excited about the idea of paying more taxes. this thing i have always made clear. i have yet to meet people that just love taxes. nobody loves paying taxes. in a perfect world, none of us would have to pay any taxes. we would have no deficits to pay down and schools and bridges and roads and national defense and caring for our veterans would all happen magically. we would all have money we need to make investments and the things that help us grow. investments by the way that have always been essential to the private sector of success as well, not just important in terms of the people that directly benefit but historically, those investments we have made in infrastructure
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and education and science and technology and transportation. that's part of what has made us an economy super power. it would be nice if we didn't have to pay for them. this is real world we live in. we have real choices and real consequences. right now, we have significant deficits that are going to have to be closed. we have significant needs if we want to continue to grow and compete in this 21st century, hyper competitive, technologically integrated economy. that means we can't afford to keep spending more money on tax cuts for wealthy americans that don't need them and weren't even asking for them. it's time we did something about it. i want to emphasize, this is not simply an issue of redistributing wealth. that's what you will hear from
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those that object to a tax plan that is fair. this is not just about fairness. this is also about growth. this is also about being able to make the investments we need to succeed. it is about we as a country being willing to pay for those investments and closing our deficits. next week, members of congress are going to have a chance to vote on what we call the buffett rule. it is simple. if you make more money, more than $1 million a year. not if you have $1 million but if you make more than $1 million a year, you should pay at least the same percentage of your income in taxes as middle class families do. if, on the other hand, you make less than $250,000, like 98% of american families do, your taxes shouldn't go up. that's all there is to it. that's pretty seniable pretty s.
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most americans agree with me. so do most millionaires. two-thirds of millionaires support this idea and nearly half of all republicans. we need some of the republican politicians here in washington to get on board with where the country is. i know some prefer to run around using the same reflexive, false claims about wanting to raise people's taxes. the truth is i have cut taxes for middle class families each year i have been in office, i have cut taxes for small business owners. >> making his points about millionaires and billionaires, a point we have heard before and doing something he did yesterday, which is important politically. making a distinction between people that have $1 million. people who have saved through their whole careers and have $1 million in net assets in the bank and people who earn $1 million a year or more politically. there are a lot more people in the group that have $1 million than there are in that group that earn $1 million or more.
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that's the group the president says he is targeting with the buffett rule. they are slicing this very, very fine as they are saying who they are going after with this new tax proposal, guys. >> how significant is this vote that they will be in the senate next week? the buffett rule is going nowhere at the moment legally. however, they are having this vote. is that in an attempt to go through the election and personalize it to individual senators as indeed one assumes he is going to personalize this to the earnings of mitt romney? >> it is an opportunity for the democrats to get republicans on the record voting against it. it clearly is not expected to go anywhere. it is not expected to advance in the senate, not expected to be taken up in the republican controlled house of representatives. so it is not going to become law. this is an opportunity for the democrats and the president of the united states to make a political point here going into the election about fairness in the tax code and fairness in the economy. that's something they think is a winner for them. as you saw, draying that
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contrast with mid romney and republican support for the wealthy is very important for democrats when people are so anxious about where the economy is going. >> aman jabers, thanks so much. >> the abc washington post poll showed that most americans believe fairness is more important to them than any regulation. this is the rally we have so far today. we have broken that downstream. as you can see. the five days of losses very much behind us. clearly, europe has bounced back overnight. that's got a lot to do with that. financials are leading us higher and a strong performance from the material sector and telecom today, you see the advance decline, 7-1. a big move today to the upside.
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bank of america is catching an upgrade at guggenheim. they are raising the bank to buy from neutral. on the line is marty mosby. good morning. why are you upgrading? >> we are upgrading because we believe this is a traditional bank recovery that is sustainable this year in comparison to the last two years when we didn't have enough earnings recovery and dividends recovery to sustain the positive we had earlier in the year. as a result, the pullback provided an almost 30% upside to our target price. we felt like we didn't need to adjust that because we are looking at the net losses they would have under our worse case scenario. we only believed that could pull down the tangible value to about $11. >> so the target is $11. we were trading at $8.83 at the moment. >> yes. so that gap is the fact there is
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less losses than what's out there. the fed's stress test was very positive. we think that the earnings season for the banks in general will show a positive earnings surprise. as we are looking at that, we think we will continue to see the positive traction we have seen throughout the first part of this phase turning into the earnings momentum phase we will see throughout 2012. >> interesting. does that apply to the other big banks, marty, where are you on citigroup and wells fargo and the rest? >> our focus has been on the high quality banks like citigroup and jpmorgan that are uniquely positioned to take advantage of what's happening in the economy today. it is a rebound we believe will happen in investment banking as well as what we will see for banks like wells fargo, which is efficiency gains which will generate a lot of bottom line
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preprovision earnings growth. preprovision earnings will begin to grow in 2012. this will be the first year it happened in comparison to the last three when they declined. >> of all of those, which is the top one? >> yes, would be wells fargo going into the first quarter and the second quarter, efficiency gains that they get. >> the price target, we are at $33.67. where do you think wells fargo will go to? >> above $40 over the next 12 months. >> thank you, sir, for your time. the market slide bringing the fear back into the market. breaking through the key 20 mark yesterday. what is the trade on volatility. dan joins us now. what is volatility telling you at this snoint. >> we are seeing a pop-up in the vix like you said. you are seeing a pullback in the
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fix. overall, you are seeing a market being tested for the first time and the vix is pushing up towards historical average of around 20. it is not heightened to what we have seen over the last 20 years but the mean or average of around 20. >> if you take a look at the curve, dan, keep in mind that before, we were seeing when we went out to the curve, we saw that investors were expected volatility to reach back into the markets. if we go farther out, is there more volatility to come? >> that's a good question. if you look at the curb, you are still seeing quite a lot of premium built in. trading around 25, 26. still a fair amount of premium. it is important to point out that really for the first time this year, we are seeing realized volatility stepping up to what the vix is implying. right now, realize, volatility
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picking up a little bit. if it continues to escalate from here, particularly if you see the s&p break 1350, you know there is a good chance we could see the vix in the 25, around the 25 level. >> dan, great to speak with you. thanks so much. >> thanks, melissa. let's check in on what the charts are telling us. obviously, the five days of negative action may have damaged the position that katy stockton, chief market technician at mkm partners. did we do a lot of damage to the way in which you view the market, you technicians view the market, as we came down over those sessions? >> no, we haven't. looking at the s&p 500, the pullback has been somewhat fast the and furious. we haven't seen any major breakdowns yet. the support that i am watching over the near term is about 1340. i think that the pullback has another few days to it at a minimum. intermediate term momentum is strongly positive.
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april does have positive seasonal influences. this pullback will be short-lived and presented by an opportunity. >> do you go as far as to suggest where we might trade on that buying opportunity, what up side there might be? >> the initial resistance for the s&p 500 is around 1440. there is quite a bit of upside after this pullback. right now, we have a very extreme oversold condition of more than 50% of the constituents of the s&p 500 are oversold. that tends to see the market higher over the next couple of weeks. >> a very bullish core. very different on copper. damage has been done there as far as you are concerned, i believe? >> there has been. it is more short-term in nature. it did break some short-term support, sort of a pennant formation, if you will and is now testing in intermediate term upline. copper has not been a great benchmark. it has hagged the s&p 500 pretty significantly in february or march. for benchmark, i would be more inclined to look at the european
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indices. >> when you take a look at the dow transportation average, is it a concern that we are approaching levels that would test support? >> for support on that, it is about 50,000. we have seen it stableize in the sector. it is not a double top until you break support. i would keep a tight stop loss on those positions. >> katy, just before we lose you. where are you on oil? >> crude oil has broken short-term support. it is an inconfirmed breakdown. it's back load breakout point from february. that's a concern. it actually has suffered a loss of e intermediate term momentum. a bit of a setback. >> where is the support? >> it was around 102. we are still sort of testing it. that's why it issen confirmed. if it breaks more decisively, the next support is back at the
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200-day moving average around $9 7 a barrel. >> we will be talking to the ceo of zip car on his new initiative with honda. that's next. it's very important to understand
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a living breathing intelligence bringing people together to bring new ideas to life. look. it's so simple. [ male announcer ] in here, the right minds from inside and outside the company come together to work on an idea. adding to it from the road, improving it in the cloud all in real time. good idea. ♪ it's the at&t network -- providing new ways to work together, so business works better. ♪ we are sitting at a 1% gain on the s&p, nasdaq and the dow jones. particular strength when it comes to the financials. we are seeing the yields in spain and italy drop this morning. for the likes of a bank of america, morgan stanley, strong gains of more than 2.5%.
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>> alcoa, top gain, up 8%. zip car certainly has a stock we are watching this morning. announcing honda will become a preferred partner with a specific focus on hybrid and electric vehicles. shares are down more than 50%. here first on squawk on the street is the company's ceo, scott griffeth. in terms of what this partnership with honda brings, are you finding that more customers might be willing to become a port of the zip car sharing program if there are electric vehicles out there? >> what we are announcing and hope it brings some continued excitement. we have had a very long relationship with honda. for a very small number of cars haan da engages with 670,000 zipsteres and we get real news
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into the membership base. we will be bringing more than 100 new e.v.s and plug-in honda accord electric vehicles in the next year or so. we will get new technologies and expand the kinds of products we are focusing on for a while. >> are they cross subsidizing your expansion into the uk or spain? people fear the cost of entering the markets. >> they are not directly subsidizing that particular part of our business. this gives us great economics on the vehicles and also gives us some real assurances about supply. around a brand that our customers, our members, we call them zipsteres are always really engaged with. new technologies like the electric vehicle and the plug-in accord that we are going to be putting into the fleet, our members get really excited about that. there are some economic benefits to the company, not specifically into europe. give us an update when it comes to your profitability
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timeline. you said in the past three years, an investment of $3 million to get to break even in tier one cities. do you still see that being on track. what does the economy tell you in terms of that time frame, to speed it up, slow it down? >> that's probably about on track for european cities. we did a little better in that. invested less time in u.s. and north american cities. we assumed in europe, it may take longer. two quarterly profits in a row. we have previously announced we expect to be profitable as a company on a gap basis. we are on the path to profitability even with investments in new markets. >> you came to the market at $18 about a year ago. you are clearly well below that now. you searched up on day one, $28. it was a huge premium. you have lost that. what's gone on behind the scenes? how do you feel about where shareholders are? >> we are really focused on
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executing. we see the global opportunity for this company at about $10 billion. so what we are focused on is executing and building new cities in europe. we have this tremendous first to-scale advantage. we are trying to take advantage of that. this great brand position we have out there. does the stock market fully understand our business model and our position. apparently, not wyet. >> there are some head winds in europe that are coming. when we had real head winds here in north american, in late '08, '09, and early '10. people were looking for ways to save on their household. join zip car and dump the car that you own if you were a personal car owner. with he know through surveys, spending on transportations in households goes from 19% to 6% when you join zip car. that's a big benefit. >> when you say it is a $10 billion category just to be
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clear. you are saying that's north america, europe as well as asia in aggregate, where does that $10 billion come from. are these people that don't normally drive cars. this is their tangential extra users. are you taking share away from hertz and dollar and thirifty? >> i don't think that is it. people are often making a choice. >> they are zip caring instead of buying a car. >> half of our membership base is selling a car or choosing not to buy a car. >> when you see vehicle sales so strong in the you states as the car manufacturers have reported as of late, does that make your concerned that perhaps that transition is not happening with zip car? >> i don't think that is happening as aggressively in cities where we operate. what we are seeing as the economy goes up, both can thrive quite well. we are going to help households save money and the car companies are going to come together like
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this honda deal we announced today. we really see the opportunity to build this together across major cities across the globe and hit that $10 billion market. scott, great to have you. >> just before you go, let me ask you about gas prices. how are they affecting the business. >> gas prices are a double-edged sword for us. i buy gas for 675,000 people. >> what do you pay for gas? >> we pay the prevailing rate and get some discounts after that. when gas prices go up, people start to do the math on the total cost of car ownership more than they used to. they look past the gas but look at insurance and parking and maintenance. why don't you join zip car and get rid of it. it really benefits it there. we have been able to pass through relatively small increases in gas prices for a quarter an hour or a dollar or
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two a day. we more than make up for the swings we see and are able to make up for that. alcoa going to talk about the aluminum maker next after the first quarter release helping to boost a general snapback on the markets and we check in with rick santelli to see what he's working on for the next hour of "squawk on the street." good morning, rickster. >> good morning, simon. i'm excited today. why? because at 2:00 eastern we're going to get the deficit for the month of march on the monthly budget statement. even though we've added 2 million jobs this year, tax receipts on the latest data and we'll see updated revenue at 2:00 eastern are flat with last year but the deficit amount is increasing. why important today? this is basically the six-month anniversary of our fiscal year. it's our half year. the deficits keep climbing. the president is talking about collecting more taxes. you know what i'm going to talk about? it's not going to even get you near solving the problem of
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♪ a departure at jcpenney. the ceo announced he'll leave the company. the coo will take over as chief financial officer. there's no reason attached to the press release. there's a search for a new cfo. >> when these guys come in, the finance function is one that they usually want to take control. when johnson comes through, the finance guys are the nerve system of the business. they are often the ones they eject at the time when they announce 900 job losses. he may have been resistant to that within the company. >> could be.
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>> let's get to it. time now for our squawk on the tweet. you may have heard about showrooming and done it yourself. shoppers go to big box retailer like best buy, target or walmart and browse merchandise and buy the merchandise on a separate online site later. retailers are trying to fight back to keep customers in their stores. short of slashing prices, what would get you to buy products in stores? tricia tweets, make the shopping experience less frustrating. i'm happy to buy when the store doesn't raise my blood pressure. jason tweets, free mimosas. and lower gas prices. that's a problem for big box retailers at the moment. >> we're watching nat gas
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approaching two. it's nearing a fresh decade low. a decade low here. we're pretty much sitting here firmly in the green across the board on the major indices. >> still a triple digit gain. what's coming up tonight? >> tonight at 5:00, bob weir will join us with a special announcement on a new streaming deal. founding member of the grateful dead in a streaming deal. we have details at 5:00. >> almost as easy talking scotch there. almost. let's talk about stocks. nokia 16-year low company announcing first quarter and second quarter devices, margins, sales not as robust. we are seeing shares of microsoft with technology trade in the green. microsoft taking a hit down by
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0.2%. >> the warning from nokia is across the board and all functions. they have problems. >> that's why the stock is down 14% versus microsoft off slightly. that's it for us here. we have much more "squawk on the street" straight ahead. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> we've got breaking news out of asia. if you are just waking up magnitude 8.7 earthquake hitting. >> should have immediately gotten on a permanent and effective tax structure. >> with government at the federal level, they ought to get ought of the way and let our entrepreneurial society take hold and create jobs as it is capable of doing. >> margin core prices up 1.3%.
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that is month over month. it started close to double what we were expecting. >> i do not think that they are going to be let go on any government. these are big banks and the fix is in to let those banks survive. they shoot nokia like horses that are tired. this is a stock that people have constantly tried to bottom fish and speculate. not only research in motion, people at home just because it's at $5 or $4 doesn't make it. you can lose 100% of your investment. >> opening bell ringing on wall street. a look at the realtime exchange. >> every day is quite different when people think gold versus s&p. the s&p is plus or minus 19% and gold is only 13%. gold is less volatile than the
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s&p 500. >> good wednesday morning. welcome to the third hour of "squawk on the street." quick check on the markets on this wednesday morning. obviously the dow trying to reverse some of the losses not just of yesterday but of the past five sessions and close to session highs. nasdaq up almost 40 and s&p is up to 1372. jcpenney making news on word the cfo is leaving this week. best buy up around 3% right now. this investigation into allegations of personal misconduct regarding ceo brian dunn is unrelated to business. the reason best buy is giving for the sudden resignation of the former cfo. nat gas is close to $2, which would be the lowest since 2002. we'll keep a close eye on what's been a relatively volatile session for the energy sector as well. volatility as you may know is back. the vix up more than 20% this week alone. we'll show you how to play this roller coaster and still keep
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your money safe. and then alcoa kicking off earning season with a bang. we'll see what the aluminum giant means for the industry. apple sued by the department of justice by ebook price fixing. is it a sign of weakness for the tech giant? spanish banks under a lot of pressure again today. we'll find out what it means for markets here at home. all of that is coming up in the next hour. first on markets, want to bring in senior equity strategy with wells fargo advisers. scott, always good to see you. good morning. >> hi, carl. >> interesting reversal here. i wonder if you pin it largely on alcoa's results and if you think that's justified today. >> i think it is largely on the alcoa news. i don't know if it's justified. i think materials earnings will probably be down 2% here in the first quarter. but one company does not an earnings season make. we're probably going to come out of this with maybe 2% earnings
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growth in the first quarter and really for the full year we're just looking for about 5% earnings growth for the s&p 500. >> always a debate about whether alcoa is just another company or whether the comments about end markets, about trucking, about aerospace, about beverages, about automotive, means something larger for the economy and for markets. are you willing to read that much into it? >> you know, i'm really not. i think that we're in a modest growth, modest inflation environment. i think that's going to last for a while. i think we're going to be below trend gdp growth for the foreseeable future. our official number is 2.2% this year. a lot of guys are lower than us even though they have been inching it up a little bit. i think the economy is going to grow just modestly for quite a while but i think what's really happening, carl, is people are becoming around the world really investors are becoming more confident than the u.s. is not going to slip into recession and that they can count on that modest growth coming out of the
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u.s. where in europe it's how bad is a recession going to be? who knows how much growth is going to slow in emerging world. i think the u.s. is more reliable and people like that. >> you mention the troubles out of europe. spain, industrial production today pretty miserable obviously we're all watching yields in a way that we were late last year. do you think the strength state side will be good enough that we will not repeat dynamic that we had a few months ago where europe did drive the train? >> i tell you, carl. italy and spain these yields have moved up. i'm a firm believer that we're going to revisit this european sovereign debt situation many times in coming years. it's going to cause a lot of volatility as we look ahead. i think it's going to this time -- you get these yields much over 6% and people are going to start to worry about it. even though the u.s. is on more solid footing, we still rely on europe for some earnings and certainly for some business.
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it's not going to be smooth sailing if europe stumbles here. >> your target for year end? 1325 to 1375, which i'm guessing we don't just drift there. you are probably looking for volatility throughout the summer and along the way? >> we are. this is a lot like last year. i don't expect that kind of volatility. we trade above target range. we trade below our target range. i think we feel good with that target range right now. we've been fortunate in the last few years we haven't hello had to adjust that target. i will say the u.s. data is better than we maybe expected. there may be a slight upward bias in gdp. i think that our target is pretty solid. i just don't think given the fundamentals this year that you can really expect a big year out of the market. >> and finally, i'm guessing you do not believe that there will be the appetite for people who are already in fixed income to
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take a bet on equities? do you think the ten-year will retest the low yield? >> it feels like it to me. if this turmoil continues in europe, there's one piece of paper that you want to buy in the world if you are an investor when you want the flight to quality. it's u.s. treasuries. i certainly think we could trade with a lower yield here although really if you could count on u.s. growth at 2.5%, something like that, historically, the ten-year yield ought to be quite a bit higher than where it is now. that's where we'll work ourselves over the next year or something like that. it's not going to be 170 or something like that a year and a half from now. if it's there, we're going to be in trouble. >> let's hope it doesn't come to that. scott, thanks a lot. >> thanks, carl. >> let's get to the cme and check in with rick santelli. a lot going on today including a little ten-year action later this afternoon. >> we'll have an auction of our ten-year debt, okay, and we see that europe is trying to grapple
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with the issue of debt and they're trying to price what's reasonable and trying to figure out what investors are lending to the ecb for 1.80 yield when they have so much debt for ten years with the u.s. would you lend uncle sam your money for ten years for a rate of 2.02? let's stick with the topic of debt. the white house has quoted a number that i think is an old number. how many filers are making more than a million? not what you're worth but more than a million. i think they quoted a number but it was old. 22,000. i read other closer more updated numbers that say it's 100,000. i had one of my co-workers and said on politico they listed the number as 225,000. let's play a little game. all right. 22,000. let's say that's the number. take a million dollars away from these people. just take a whole million from them. okay. we go one, two, three, one, two,
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three. what does that leave us with? 22 billion. take a million from this if this number is right. one, two, three. one, two, three. what do we have here? we have 100 billion. let's say the number is 225,000. let's take a million from those people. what does that give us? that gives us 225 billion. you know what we're going to learn at 2:00 eastern today? for one month, one month, our deficit is going to be close to $200 billion. you see what i'm getting at? let's take a billion away from those filers. what does that do? it cleans out one month. let's look at it another way. from october 11th to march 12th, our half year. fiscal year starts on october 1st. if you look at total public debt held, it has increased 792 billion in this time to a grand total of 15.6 trillion. you see what the problem is? we can bash people.
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we can drag people that used to be called successful and drag them down. is it going to cure a problem? no. we cannot collect enough taxes to catch up with spending. do i know a solution? not really. does your politicians know a solution? does our commander in chief offer a solution? absolutely not. back to you. >> rick, i thought for a moment that you were going to have a solution even though we already know a lot of them do not. >> i have solutions but you know what? it will take a long time to go there and people don't really want to hear solutions. they want to change the dialogue bait and switch so we get more worried about what people pay, what's fair. how are my kids' opportunities affected by how many millionaires there are? i don't see that opportunities are affected. what i see will affect their opportunity? $15.6 trillion. >> just be careful with the furniture, okay? don't throw the board across the floor. >> the furniture is cheap by comparison.
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>> thank you very much. rick santelli is chicago. quick check on nokia. stock is falling to a 16-year inter day low at $4.33. if you missed news earlier this morning, cutting outlook saying they are seeing increased competition in emerging markets and the software bug in the fancy new phone causes the phone to lose the data connection and they say the bug will be fixed next week. turn to earthquakes today that struck off the indonesia island earlier today. our next guest is in jakarta and worked on reconstruction after the 2004 tsunami. edward, good to have you with us. thanks for coming to the phone. >> thank you so much for taking the call. >> can you just tell me a bit about what you experienced or what you've heard today in the way of impact from this quake? >> sure.
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well, so far we've had dispatch of first responders to the site by the president of indonesia. all indications are that the situation is at this point in time under control. and people have evacuated to higher ground in an orderly fashion. these are all lessons learned from the 2004 tsunami that essentially killed 179,000 indones indones indonesians. it's about 2 1/2-hour flight from jakarta so we're somewhat removed from the situation but nonetheless, you know, the response takes some time to get there but all indications are right now that we've got just dealing with power outages and nothing of the nature of sort of devastation or impact that happened in 2004. >> all right.
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our understanding though is it's hard to calm panic if you've been through something like 2004. reports of people screaming god is great. patients wheeled out of hospitals. one guest at a hotel was injured when he jumped out of his window. was it clear to you that people were afraid and were worried? >> certainly. anything of this impact and we're talking reports of anywhere between 8 p.6 and 8.9 quake shaking and in that area of region everyone will have a higher degree of sensitivity. one of the remarkable things we learned in the past several years is to put in the early warning systems to allow people to be forewarned to go to higher ground and the 170,000 that perished in 2004 was really a result of one in a century event which was coastal folks living and being impacted by a very large tsunami.
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today we have most of indonesians regardless of income status with cell phones and text messages go immediately out and early warning signs and sirens go off for people to seek higher ground. the degree of good intention and well conditioned folks but nonetheless you can't shake off an impact of a quake of this magnitude and not have a sense of deja vu all over again. >> edward, appreciate your time. thank you so much for giving us perspective on what happened or thankfully what did not happen there today. >> rick santelli made us all feel better about our situation here. >> he has a way of doing that. edward, thanks a lot. >> thank you. >> when we come back, alcoa kicking off earning season with a big profit surprise giving the markets a boost. will the momentum continue with the dow up 90 points? we're back in two minutes. how can you just stand there?
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alcoa kicking off earning season with a surprising first quarter profit. earnings did call 69% from a year ago as aluminum prices continue to decline. lloyd, good to see you again. >> how you doing? >> not bad. neither is the stock although your price target at 18. walk us through what's been said this morning which is
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productivity gains, cost savings, not as clean a beat as you might expect from some. >> i look at alcoa as tale of two companies. there's a commodity company, productivity gain was huge. aluminum price was up from q-4. we'll see improvement later in the year when china gets its act together and grows faster. the real beat and they beat our number, our number was seven cents going in out on the street. they beat it. >> well above consensus. >> the major beat was in flat roll products and engineering products both had record profits, record margins, these are growth businesses spurred by arrerospac
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aerospace, automotive, packaging around the world. these are two segments that have something to do with the real economy and what people should look at to use a alcoa as a bellwether. commodity bounces all over the place. >> your point is well taken about aerospace. what they said about annual run rate for autos is impressive. is it possible to have that phenomenon exist here and also have the weakness that they are seeing in europe at the same time? >> yes. aerospace is a global growth market. boeing and airbus have a backlog and will take production of airplanes up and alcoa will enjoy a lot of growth there. you'll see steel switching to
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aluminum and auto bodies to meet the cafe standards. that's got to happen. strong growth there. alcoa does have exposure in europe. they are seeing some negatives there. north america and markets around the world are very strong and growing and i see huge opportunity for growth in two downstream segments over the next three to five years. >> lloyd, thank you so much for your time. we'll keep a close eye on it. >> alcoa is no longer just a commodity company and it's time the street take a different view. >> when we come back, apple is getting sued by d.o.j. we'll catch you down to the close in europe in just about 9 minutes and 20 seconds. auto-bliss.
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♪ >> big news in mobile technology this morning. apple is being sued by the als it cut with publishers that changed the pricing model for ebooks. we go live to san jose for more. good morning, john. >> let's start with apple. attorney general eric holder is slated to hold a press conference next hour where he's expected to announce the u.s. filed an antitrust lawsuit against apple. apple stock is holding its own on the news because it doesn't strike at the heart of where apple makes its money. it's about the ebook store.
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amazon priced books below cost to gain market share. publishers hated that. then along came steve jobs with a new idea. we'll let publishers set the price and add a percentage on top of that. you can't cut any side deals with anyone else for less money. everyone has to play by these rules. ebook prices went up and amazon lost its lock on the ebook business. okay. now let's talk nokia. not only did company say overall phone business is doing worse than expected but the new smartphone that launched in the u.s. on easter that's supposed to revive its fortunes got this glitch where sometimes when it is on a data connection, the connection will just drop. this is a big problem for them because one of their large marketing companies was a smartphone beta test where they made fun of glitches in other people's smartphones including apple and android phones.
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we'll see if they can recover from this and actually do well in gaining share for the windows platform which is facing an uphill battle against apple and google. >> risks and rewards in tech are unbelievable especially risks as we see today. thanks. a few minutes left in europe's trading today. when we come back, we'll get you the close in europe and how it might affect trading here in the united states in just a moment. . hey, heard any updates on the game? i think it's final seconds, ohh, down by two, shoots a three, game over. so two seconds ago... hey mr. and mrs. harris, where's kevin? say hi kevin. hi. mom, put me down. put...the phone...down. hey guys. did you hear... the choys had their baby? so 29 seconds ago. well we should get them a gift. [ choys ] thanks for the gift! [ amy and rob ] you're welcome! you're welcome! [ male announcer ] get it fast with at&t. the nation's largest 4g network. at&t. ♪
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welcome to the world leader in derivatives. welcome to superderivatives.
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if you ever wonder why we pay so much attention to the european close, consider yesterday when the dow was having troubles but it was only after europe closed that the real pain began. and simon hobbs, you recall that as well as anybody. >> today is the flip side of that. we've had a great day on wall street partly because of what happened in europe and we got to meet somebody new. the new frenchman on the governing council of the european central bank. he was the guy that today is in charge of the market operations. he suggested that perhaps in spain the political will is there but the markets were not actually reflecting that which is a clear way of opening the door to the prospect that perhaps the european central
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bank will soon restart buying spanish bonds. that's how people took it today. i'll show you what happened to the yields as a result. let's go to the map as we shut out on today's session around europe. >> are closing now. >> so as you can see, it's green virtually everywhere. if you didn't know where finland was, you can see it now. it's red as a rumt z s a result happened with nokia. banks did well around europe today. let me show you specifically on spanish and italian yields when we got up toward 6% yesterday on what the madrid government has to borrow and way the comments from the frenchman brought us down. this is a weekly chart. you can see that we just tracked lower. that's eased tensions as far as many are concerned in the market. in italy, you have seen contagion coming from what was happening in spain. you see it in italy. the yields have now come down a
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little bit and that's easing the concern there. as far as the session goes overall in europe, if you look at frankfurt, paris and indeed spain, we are off the highs. we were tracking higher but people have sold into some of the big moves that we have to snap back on banks and that's why we have not got such a high close as we might have had earlier in the session. i just wanted to talk a little bit about the banks and damage we had done today. brussels and spokesman over at european commission were suggesting that there isn't any need this stage to have additional funds go into spain to bail out the banks but there is a concern not necessarily on banks about the amount of money they need to stabilize once they set property losses. we are down 13%, 14% on those banks during the course of the month. it's french banks and prospect you might have with the presidential election and splitting up the french banks that's taken them down.
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it's really damage. hsbc made a bold call. they suggested people should overweight the european banks in general. they say that a point will come at a point where so many people where big funds are underweight that they will reverse that and maybe the earning situation isn't worse than 2% loss may pick up and banks could bounce if you get the point i was making there. >> it's a large if as we well know. >> it's a big call. barclays had a positive call for their black rock holding. they have 20% holding in black rock which bolstered them as well. >> as long as it doesn't look like yesterday. it was painful to watch. thank you very much, simon. let's bring in our chief international correspondent, michelle caruso-cabrera, with more on the situation in spain. i wonder if we should put on battle gear and getting ready to get back into it. >> that's the question we were
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trying to ask. we really wanted to look at the situation in europe and say what impact on u.s. stocks ultimately? are we going into a situation a year ago where it was horrendous turmoil. let's give you context about what simon has told you about. spain has been the issue this week. but the new prime minister of spain is a very different political animal than what we have seen in the past. every day this week he has come out announcing new measures and not been in denial like we have seen in the past with them yelling at markets and telling them they were wrong. he said we're going to reform and not just do austerity measures. he's not in a state of denial. simon hinted at this in his piece. look at spanish yields. they have climbed throughout the month. they are down today because of remarks from the guy at the
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european central bank saying that maybe they might buy spanish debt in the future to bring down yields but rise in spanish yields this month led to an effect in italian yields which are also rising in the last month. i want to tell you a tale of two different bond markets because i think it shows some context that will give us a sense of whether or not this is going to have a lot of impact on the united states. italy borrowed money this year. one year. they wanted to borrow $11 billion over a one-year period. interest rate they paid this morning was 2.8%. can we bring up this full screen in compa screen? compare to what they did last year. interest rate in november was 6%. not as bad as it was back then. there's still time. germany borrowed money this morning. lowest ever yield. the interest rate they offered this morning was 7.5%. last year as high as 3.5%.
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what's really crucial though, two things to remember. the spanish auction was oversubscribed. in other words, more people wanted that high yield spanish debt. germans got greedy. not as low as you might think. bond investors said that's not enough. i think it's not like last summer at least not yet. >> would you say -- we talked about the pain threshold at certain levels on a yield. are we past that in spain? >> i don't think so. the number is 7% generally. that's the consensus. that's where we saw greece go under, ireland, portugal, et cetera. italy is believed to have a lot more time at that 7% level. spain as well. remember spain is about banks. not necessarily the sovereign debt. are they going to have to spend 10% of gdp to bailout banks. >> great insight. thank you so much. bob pisani joining us here at post 9 looking at the markets today. up triple digits.
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>> 100 points. where is the sudden revival in confidence come from? it's mysterious to me. i'm supposed to know the answer to that. alcoa is helping. steady aluminum demand is good news. comments from ecb officials that if all hell breaks loose in spain, they'll be out buying spanish sovereign. that's certainly the major factor going on. for whatever reason here, just look at major sectors here. there's big growth sectors. financial, consumer, discretionary, industrials, technology, materials on the upside but not as much. another thing i took a bit of heart upon seeing was comments out, reports out, that the eu and the european commission, which is the executive body, has got a plan for growth in europe. they will be unveiling plans in the next couple weeks. there are reports out and just look at this. they are creating plans for job creation policies. this is very important. you can't have austerity, it's not going to work without growth policies. they are talking about trying to find ways to shift the tax burden from labor to property
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and to energy and more importantly remove restrictions on labor movement within the european union. this is very controversial right now. remember, france has restrictions on immigration from eastern europe into france. this is a political issue right now. the eu is venturing into very difficult political territory. the good news here is they are starting to do something on labor movement. on pro growth policies. you'll have people commenting saying brussels is trying to get involved. first they are trying to deal with everyone's budgets and now tell everyone what labor policy should be like. you'll get a lot of criticism. i think on the balance this is certainly good news. you want to see how tough things still are. take a look at some things on periphery like champagne sales. it means nothing to most of you or to me of course. champagne sales are down. these are measured year over year. here's what's interesting. if you look at what's going on,
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european shipments are down 14% but other countries around the world are actually up 9.6%. again, this doesn't mean a lot to me. if you lookty company that's a in the luxury market, one company makes the most popular in the world, they've been moving up recently after bottoming in december on hopes that luxury goods might do better. you can see it's up fractionally today but it's been under pressure for the last month. i know nothing about these matters. the 2002 is drinking well. i think i read that on a website. >> try the thunderbird. thanks, bob. let's hop over to bob pisarick in chicago. >> i tell you what, down on the floor, i started trading at the old exchange that is no longer an exchange, it's a health club.
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you were already walking on hallowed ground. we look at what's gone on. you can never look at percentages with fixed income market. sometimes it paints an erroneous picture. yesterday the shots market, two-year in europe, closed under ten basis points. today trading 14 basis points. you can say sure yields in europe are up 50% but that's disingenuous. yields in japan, what's their two-year? >> 11 basis points. >> the point is do you think that these low interest rates, what picture are they painting? japan has low interest rates but they don't have a lot of prosperi prosperity. how can we tackle this and understand the dynamics? >> the dynamics are very complicated. let's simplify. are are german rates at 9 basis points? let's say they are under 20. what's the difference? germany is the most robust economy in europe. that would make no sense. we would have to look for other
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reasons. german collateral is the aaa collateral of europe. everybody wants it. we're getting a shift because people all over the peripheries want to get money out of greece and spain and get money somewhat out of italy and portugal. we stuff it into german banks and they are buying german two-year notes because they rather own that sovereign than anywhere else in europe to safeguard their euros. >> what do they do once they buy them? >> put them in their mattress. >> they are avoiding banks in the country even though they buy the high quality sovereign that is overlay of the entire european union. >> we're at 203. that really misses the point also. there's radioactive collateral. gse hold that stuff. tax dollar at work. what's left, you work on high quality paper whether it is
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boons or treasuries but it's a relative term, isn't it? >> of course it's relative. with all of the pension funds we have around the globe and sovereign wealth funds have to own something. >> even though it's well bid and it's low rate, it might be a horrible investment because at some point the world isn't going to be able to see all of these investors continue to fuel the demand side while the paper we're generating. >> that comes back to you will like the phrase bond vigilantes that have been sidelined by the actions of the global central banks. the fed. the ecb. the different national banks. they pushed them because there's been no money to make shorting these bonds. we saw it last week or two weeks ago. >> shorts got killed. >> ten-year rallied up to 235. >> we have to leave it here. we'll have ira back tomorrow to do part two. he's our favorite guy. carl, back to you. >> nice double-header. thanks so much. straight ahead, rating your own portfolio like an activist
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investor is next. first, a look at winning and losing stocks from europe's trading day. nat gas, we should mention, just over 201. now a fresh decade low.
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welcome back. coming up on the halftime report, is the correction overall ready. traders show us how to play the big bounce. guidance lousy? trade on the biggest publicly traded pure cloud company and find out why even yelp's underwriters are underwhelmed by the stock. something you don't see every day. now back to carl at the exchange. >> see you soon, scott. activist investors guide companies through volatile times but could it lead your portfolio through volatile markets. kayla tausche is looking at the numbers. >> it would appear that investors in funds or following their lead would mean underperforming the overall market. the so-called event driven hedge funds which is basket including but not limited to activist investors were up 4.5% in q-1 lower than hedge funds overall
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and much lower than the s&p 500. that's not to say that the strategy doesn't work. activists get the most gains over a longer period of time from when they take a public stake in a company via 13-d filing to when they get what they want and then they exit. the most winning fund is bill's square. it has returned 148% on the investments on annualized basis since the firm's inception. that number as you can see is buoyed by a move that flipped billions from bankrupt real estate and bumped up names with near double digit returns. following that we have dan's third point with nearly 98% in annualized return and also a big year on jana partners and mcgraw hill. we see the relational and short seller greenlight in that top performance tier.
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traditional activists you may know the name of like nelson have seen middle performance. still best in the market but in a lower tier. lowest bracket sees yucaipa and harbinger and bottom of all activist on return basis, name make it fund of richard breeden. lower by 18%. as for strategies, only thing that hindsight tells us is avoid book sellers. >> interesting stuff. great numbers. thank you so much. kayla tausche. you can see markets pulling back from earlier highs this morning. still pretty significant comeback from yesterday. for more on markets, our capital markets editor gary kaminsky joins us on the phone. i have a hard time imagining you think this reversal means more than a one day give back. what do you think? >> it's a nice bounce back after
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i left you yesterday afternoon i went out to speak to a number of people. i think it's important to remember the key bank index was up 25% for the first quarter. best performing sector. so as it relates to earnings in terms of trying to see we pointed out the correlation between the s&p and earnings estimates. there's so much focus on financials. there's so much focus on one cart in the apple but so much focus on financial, earnings that we'll see on friday and into early next week and whether or not the stocks reflect the improving fundamentals or they don't. we're in a bit of a pause here. a focus on earnings at the financial companies. >> did some comments by alcoa about end markets take you by surprise? >> no. alcoa is one of those unique situations. if you want to read it as something positive, you can. if you want to read it something that's a one off, you also can.
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it's part of the impact of the dow components but don't read too much into what you see out of alcoa either way. >> google on thursday night. jpmorgan and wells fargo on friday. at what point if commentary runs along those themes, will you think, okay, maybe some of this guidance is pointing to a real trend? >> i think that if you are long this market and a bull here, you have to expect that you'll see very positive commentary out of the financials. the ones you mentioned and morgan stanley. you will have to see positive commentary and then again just what comes out of apple in terms of overall market sector, i hate to have to say that, it's just a fact. it will have a market moving event. before i let you go, we spoke so much about nat gas. i think we were close to printing a two handle today. i want to mention one stock because it's been a compelling
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situation. we touched on it the other day. obviously you have a number of people that have been short this stock. you have wilbur ross and kayla was talking about activists investors. everyone is focused on nat gas commodity price. you have a great group of people on both sides and you rarely see that. you have short people and small people on the long side. a number of them contacted me in recent days. this is one of those margins to keep your eyes on. this tug of war will send somewhere and someone will make a lot of money. >> if it breaks two bucks on nat gas, will be the first time since january of '02. gary, thank you so much. >> see you tomorrow. >> when we come back, nokia hitting a new 52-week low this morning after a software bug dashes early hopes of taking on apple and the iphone. will it hang up and try again to reconnect with customers?
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nokia shares plunging to a 15-year low after the company offered a profit warning, the stock at 4.37. the company says q-1 mobile phone sales will be weaker than expected due to intense competition in fast growing markets. a research vp joins us this morning on the phone. good morning to you. >> good morning. >> obviously being punished on a
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number of fronts. volume almost more than two times the average. is this justified? >> you know, all eyes are on nokia for quite some time now. it seems like every quarter people are expecting them to turn things around. it's not going happen overnight. nokia has really a lot of work to do. they are showing that they are on the right path. but it's going to take longer. i think it's going to be until the end of the year before we can see some incremental difference. >> when do you think they have a full range windows portfolio? when can they compete against low end android makers? >> that's going to be key for them. they are tackling markets like the u.s. and europe with high end but they need a more price sensitive product than the 610 that they have today to really
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go after the mass market in markets like asia pacific. they need to balance that properly though. they don't want to be cornered as the cheap smartphone provider. they need to build that and i think that if the press release they made it clear they are ramping things up to be faster to market with more products. i would expect in q-2 we will see something. the fact of the matter is they are waiting for the new version of the operating system to head toward the end of the year where they can add more to the windows phone operating system. >> this bug, does it shake your confidence at all about this transition? >> it doesn't. obviously it's not something that nokia needed especially in the u.s. market where they are trying to make an impression. i think the way they dealt with it shows a lot of interest in the customer.
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you are about to start your race and your engine stalls. not something you like but you can get in the race and catch up. >> as long as you step on the gas. thank you so much. good insight. don't forget to tweet us. retailers are fighting back against the phenomenon that hurt the likes of best buy. what would it take for a big box retailer to get you to actually buy products inside the store instead of from an online competitor. some of your ideas and they're good ones after the break. if you are one of the millions of men
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this is big news. good question today. retailers are trying to fight against showrooming and keep customers in the stores. what would get you to actually buy in the store? timothy writes a free massage would get me in the store. clean up clutter, retain staff and bring salesmanship back to retail and government taxing online purchases. get me to look at dow intraday. lost ground from the highs of the day. up about

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