tv Squawk Box CNBC April 16, 2012 6:00am-9:00am EDT
you have time. of course april 15th fell on a sunday this year. and today is emancipation today. observed in d.c. and by federal lawyer this gives taxpayers an extra day. you have until tomorrow on this. but not all states mirror the federal deadline, so double check your state's deadline. we'll be kicking off with a great lineup. our guest host is david walker. he's the former u.s. controller general. grover norquist of americans for tax reform and we'll talk with fred smith and bob lutz. a lot of people to talk to this morning. also citigroup will be in focus today, the quarterly results are from the company will be coming before the opening bell. analysts are looking for earnings of a dollar a share on revenue of $19.8 billion. both these numbers represent flat growth year over year. we'll bring you the numbers as soon as they hit the tape. get you instant analysis on this, too. it's pretty busy start to the week on the economic front, as
well. 8:30 eastern time, we get march retail sales aunts the april empire say the survey. then later this morning, the national association of home builders releasing it housing market index for april. and the commerce department reports february business inventories. tomorrow you can be on the look for housing starts and industrial production. on thursday of course we get jobless claims and existing home sales. also the philly fed survey and leading economic indicators. and finally the weekends with the gathering of finance ministers and central bank leaders in washington. also meetings of the imf and world bank in d.c. so a lot to talk about. >> yes, and congress is returning to work today. so we've got that going for us. following a two week break. today the senate is set to vote on the buffett rule, the proposal would require millionaires and billion mayors to pay at least 30% of their income in taxes. p ares argue it would hurt argument growth by imposing a tax on job creators and they are ready to block it because they
don't have enough votes. and they never had must have votes. but it won't stop anyone from talking about it. and treasury secretary tim geithner making the rounds on the sunday and you can show this weekend, he argued the buffett rule which has no chance of becoming law will not hurt the economy by stifling investment and growth. he tried to strike an optimistic tone on the outlook for the country. >> i think americans generally should be -- feel much more confident about the basic strength of the economy than they would have pelt anytime in the last four or five, six years. again, if you look at the scale of what will president dwill th and put out the financial fires and you look at the strength of what are fundamental measures of economic health, it's very encouraging. >> he says consumer confidence is gladly getting stronger. the thing that i learned over the weekend was that combined with the buffett rule is really raises no money. the definite set gets reduced by
0.6% over what you need to reduce it by. but some of it is being used to offset trying to take care of the last buff full rule called the amt. it was initially put in because certainly people they felt that were rich at the time, they wanted to make sure they paid a minimum tax. so now a lot of middle class people are now seeming to be -- they are in the amt. >> like $70,000 or something. >> which used to be a lot of money. so we have to get rid of that, so that's where some of the money will be used. but instead of cutting $47 billion from the did he evdefic adds hundred wills of billions of dollars. but really is like adding another amt. instead of what we need to do, we all need to get together, maybe after the election, and get rid of loopholes and lower rates and just do what we got to do. everybody wants to do it. democrats and republicans want
to make it simpler, get rid of all the loopholes. rich people will end up paying more. it will effectively be a way of raising taxes on the rich. >> mitt romney talked about some of his actual plans. he was at a dinner last night in florida. and behind closed door, he talked about it, he does plan on cutting taxes by 20%, but just on the tax rates. but he does plan on eliminating a lot loopholes, getting rid of second home mortgages or even mortgage interest on your original home. >> i had to attend an event last tuesday night and there was a lot of 1 percenters there. and the interesting thing was there were many people that are major donors to the democrats and a lot of people are major dough mores to the republicans and the one consensus is that nobody has a problem paying more taxes. the issue is nobody thinks ---er other time you have to do something, you expect some sort of return for that investment.
there is absolutely zero correlation between higher taxes and getting anything else incremental in return from government as a result. you see it at the local level. at the local level when your taxes go up, you see it. roads are fixed, trees are cut down. >> but we have to knock the deficit done. >> that's what we have now. but over the last decade as this issue has come up all the time, if there was a better correlation, and it's a great topic to get into with norquist later -- >> but you won't get more for your money on this because we've already spent the money. you have to pay the deficit town somehow. >> then there should be from this group that i attended, and this is the point, then we should have absolute stand still spending cuts in washington as a result. it basically have subjective cuts in spending will never ever happen. and these are people that give lots of money to both parties on a regular basis.
>> there was something interesting, too, which i hadn't reallyi reallyi realized. if you really want to make a difference, the three big things that you have to go after are health care, employers discount that they give for giving their employees, the 401(k), wonder what happens to the market without that tax deduction, and home mortgage deductions. and those are really popular plans. >> we can cut trying to trim fat by maybe cutting the time for secret service. don't need as many secret service agents travels and we don't need to have that much overtime, right? >> i liked the journal piece on that. they kind of say, you know, we understand you're protecting the most important guy in the world, grow up a bit. how long has this been going on. and they give it just the slightest bit of a boys are --
they're not men and sometimes stuff like this you might expect. but not when you're -- you really should elevate yourself with what your responsibilities are should dictate what you're doing. >> i was making a bit of a joke, but on a serious matter, i mean, will this is when representatives of the united states raffle the world, they are representatives of the united states. you want that job, there are responsibilities that go with. >> i'll tell you, if hillary calls me to go have brews and dance, i'm going. did you see her? swillary. when in rome. cutting quite a rug on the dance floor. the latest is that if the president finds himself down in any of the polls, see you later, joe. >> i saw that. >> he'd have on get down on his knee, beg hillary, please.
>> was that in the "post" over the weekend? >> yeah. >> if you're an adviser to clinton, where is the up side then really? >> up side is being president 2016. >> but why not just wait. let will this election happen and -- >> shouldn't want to do it, but you would be in trouble if you didn't help out the president when he asked. >> if i were here, i'd still be mad about the last election. >> let's check on the markets this morning. looks like the s&p will open up three points higher. sorkin's fair value even though he's not here. not came minu-- looking to be hr
after an unusual week last week. the first time in months that we had the kind of volatility day to day that we used to get almost on a daily basis last summer and fall. the close on friday if i recall was not too optimistic. so we will see what happens. i want to take a look at the oil markets. crude off a bit as well as the ten year. which a lot of experts told us would never go below 2% again and look at it, $1.98. so equity markets have been strong up until last week and the bond market, as well. and about we take a look at the foreign currency markets, looks like -- >> euro a little weaker today in part because they do have some auctions that are coming up in spain today. >> and then later this week, there's some big refinancings that will take place in europe. europe all of a sudden became
such a focus last week and it was on tuesday. and it wasn't on wednesday or thursday and then again on friday, every e-mail i was receiving is are you looking what's happening. >> they give them money to the banks and the banks go back and buy the spanish go. . then they start losing their butts as the sovereign debts start going down again. all of is and you had they're marking those positions and it's scary. krugman today, he's kind of interesting. he just said anything short of exiting the euro to allow yourself to devalue your currency, anything short of that won't work. almost 45% unemployment with
guys between 20, 29 years old. 24% total unemployment. just a hope less situation with nothing but austerity on the horizon. and it was a housing crisis over there that, i don't know, you can't blame it on our banks over there. somehow the whole world had a housing but bubble. so here we think it's all just citigroup and goldman sachs. but somehow the entire world -- >> did you catch the bernanke -- >> bush wasn't president of spain, was speak was it his tax cuts that did the housing bubble in spain? >> the securitization, some of the such that he allowed to have more securitization they say create all the -- >> who, bush? >> i'm just joking. did you see bernanke speak last week and he said there's no evidence at all that lower interest rates created anything with housing. >> right. >> it was like there was no correlation. zero correlation. i watched that and it was one of those things like are you kidding me? do you not know what securitization did? and in fact there's a great
piece in the journal today if you haven't seen it about now once again with lower interest rates, creating unbelievably interested securitizations. movie rights, franchises to restaurants. anything that has an income stream. >> you you wouldn't be secu securitizing if the money wasn't at zero. >> not a chance. it's basically trying to make the spread. it's happening again. just look at some of the stuff being sold and marketed now. >> all right. right now time for the global markets record. beccy meehan is standing by in london. what you can tell us about what's happening there and also with some of the debt talks, too? >> bond markets, you've been talking about the situation in spain and the yields on the spanish ten year debt continue to creep higher. i want to give you a quick look at what's going on in the equity markets to start with. we are seeing plenty of green on
the screens today, but put this into context. the regional index is up by 0.6% to 0.7% right now, but four weeks of declines for the major european indices have sent the cac down by over 11% in the past four weeks. when you look at some of this green, bear that in mind. ftse up by 0.7%, dax up by nearly 0.8%. and the cac up by 0.8%. the context is very weak trading on the european markets. in spain where much of the attention is falling, ibex down by 0.3%. fresh three elows for the spanish quit i markets. nokia is continuing to drop one of the world's biggest telecommunications companies.eq. nokia is continuing to drop one of the world's biggest telecommunications companies. but we are seeing movements on the bond markets. very quick check on where the
spanish yields stand. well over 6% on the spanish yields right now. and this really tells the story about how worried investors about the periphery of the eurozo eurozone. back to you. >> let's get to the trading pits. bob, we were having this will conversation here, a pretty ugly close on bring. a bunch of technicians were saying 1327 was the new level on the s&p. as we come into this monday morning here, do we take anything from last week that we have to carry over into today? >> you made a great point a few minutes ago. last week seamed like four or five months ago with all the volatility. and that tells you a lot about the market. i tell a lot of people that i teach to trade is now is the time where you kind of naed to ignore the why and a more play the what. and i find myself in a buy the
dip scenario. now i'm looking at dips to buy, i don't have a conviction about the next few weeks or even the next few months. so i have levels sort of scoped out to scale in to long positions into the s&p as opposed to just flat out buy it. >> and this was a good piece in the morning times this week trying to tie in the idea that there hasn't been a lot of expectations for earnings last week and will this week. if i was to say to you earnings come in great this week but the problems in europe continue to sort of mount and they become headline type problems later this week, do you think the market's higher or lower at the end of this week? >> i think lower. you have a trading background obviously. so when you think about what the earnings will do, the equity markets, futures markets are the same in that they look forward. so even if earnings continue to come out strong, we're still looking at a perspective of -- i
put a lot of stock in anecdotal evidence and i live across the hall from a small business owner and i was talking to him and he told me that he thinks be a job recovery because during hard times, he was forced to put things in his business that made them run leaner. and he has high profitability, but not high profit margins. so still not force him to hire. i think that's across the spectrum. so i think margin, gross sales will struggle. it's still demand story. i'm still buying dips, but waiting for those dips to buy. >> do you think we've seen the hive t high of the year on the s&p? >> i think we'll see some gains in the late third quarter, early fourth quarter. i think that's when things start to stabilize. i'm superstitious about the sell in may. and given the warm summer, that
natural gas sort of appeasement that we had over the winter is now over, we're not going to see that and we'll see our electric bills go higher. >> all right. thanks, bob. we'll check in again soon. >> thanks. joe, this is you. do you want me to read? >> no, i got it. where is mac? >> oh, boy, oh, boy. >> i have no trash -- you come in -- >> he can't work like this. >> get my agent. coming up -- i'll throw it on the ground. coming up, potential 401(k) rules that could impact your nest egg. plus america runs on dunkin. come on, let's go. chop chop.
holding off the three stooges. aren't there three of us on the show? to remain the number one weekend movie. lions gate staying on top for a fourth straight weekend. $21.5 million. i've seen it already. my kids have seen it twice already. >> they run around with sabres and arrows after school. it's okay. we used to do that. >> pretty well done. >> three stooges opened in second place. now today's national forecast, it's hot, i loved it yesterday, running when it's hot is so much better. >> today is the boston marathon. >> and they're worried about the heat. >> and we have a lot of viewers who are actually up there today. probably watching right now because they got up. but it's going to be
problematic. 85 in boston is not good marathon weather. >> picking a kenyan to win again this it year. scott williams is at the weather channel. it's coming in to hit 90 on the east coast? >> believe it or not, take a look at the numbers behind me. we are looking at low 90s, albany, 91 degrees expected high today. the record's 89. 91 in newark. so its a and 90s across the north and new england. boston the record today, 84 degrees. we'll likely top out right around 81 degrees by this afternoon. and take a look at the numbers. 88 the expected high. near 90 in richmond, virginia. that upper level ridge has set up shop over the eastern seaboard. so we're seeing a southwest wind, a warming wind. you talked about the boston marathon. let's look at the temperatures as we go hour by hour. starting at 7:00 a.m. in the
60s, as we go into the afternoon, those ps wi stemperan the 80s. so humid and hot out there. so certainly weather will be a factor in the boston marathon for today. overall travel focus for today, minneapolis, cleveland, houston, moderate airport delays. of course we continue to track severe weather over the weekend. over 100 reported tornados, definite investigation saying across sections of the plains. and the severe weather threat continues for today across sections of the gulf coast and also interior sections could see strong and severe storms. you can see the line of showers and thunderstorms right now in texas as well as indiana. so for today, along the gulf coast, we're looking to strong to severe storms interior sections of the northeast, as well. guys, back to you you. >> a lot of severe weather out will. we'll have to start giving you more time for these reports. >> thank you. >> see you again tomorrow. there are new 401(k) you rules looming. but how do this they affect you?
sharon epperson joins us with what to expect and how to maximize your return to retirement. >> good morning. some 401(k) plans have poor investment choices, many have very high fees. but new rules are an attempt to change that. >> new regulations involving disclosure that are very, very positive for consumers. they are now going to have visibility to all the fees associated with the management of their 401(k) accounts. >> now, withis this won't happe immediately. service providers can wait until july 1st to tell employers the cost of their plans and participants may ebb kept in the dark for another few months. you can get a free report now on the fees in many 401(k) plays and it's worth to know the costs. why will an extra half a percent in an annual fee can similar savings by as much as 10% according to one estimate.
there are other important 401(k) rules from the treasury department that may have an even greater impact down the road. and they aim to help retirees keep a secure income stream for life. the new proposal would, one, allow workers to convert a portion of either their 401(k) or i.r.a. savings into an annuity. and it would relax current rules to allow the creation of a longevity annuity within the 401(k) or i.r.a. so how does it work? when you reach 65, you take 15% to 20% of and use to buy an annuity that defers benefits. it doesn't begin to pay out for 20 years. it then tens paying you benefits for the rest of your life. the white house council for economic advisers reports treasury data shows that a $20,000 annuity would cost a 65-year-old more than $277,000 about it pays out immediately. if the payouts are delayed until
age 85, that 65-year-old would pay a little over $35,000 for the annuity. so a huge savings. a conversion like this could prevent many retirees from outliving their retirement. we'll have a lot more about the return on your rear irementirem in "power lunch." and there's much more on cnbc.com in terms of retirement. we have return on your retirement stories there. they'll be up all day. >> we were just talking about with a would happen if the tax benefits from 401(k)s and i.r.a. were gotten rid of. you start looking at real tax reform, that's one of three areas that you'd have to touch if you want to get away with some of the loopholes. >> and that's why so much people are advising and so many employers now are having the option of a roth 401(k) so
you're already able to take that money out tax free and so much advisers i talk to say it's important not just to diversify within your 401(k), but also the types that you have so you have the option so if they take away the tax key fered ca ekey tered you already have the tax free roth option. you know, north america had a warm march. so i just looked up global from satellite, global temperature in march, it was up 0.11 degrees celsius in march. above the 30 year average. you know what february was for the globe? down 0.11. so an exact wash globally. ask fin around here -- >> but it's in my backyard. >> this is for sure. yeah, definite. just look around. but this is a 30 year -- if you
look at it, it's not really 00 definite city either. here's the 30 year average. you can see that since the 2000s, it's been above what 30 years before that and overall, in the past 30 years, minuscule. >> it's not global warming anymore, it's climate change. >> and it's classic because we'll have lutz and -- did you read their whole thing? they're saying don't put down electric cars just because you think climate change people are freaks. don'ts can miss this, we need to do this to get it off the oil standard. but it's gotten a bad wrap because people can't stand the environment-eses. so don't throw away a good idea just because you think it's prop
gated by zealots. >> and by the way, if you didn't know it, it is tax time. up next, we have and i meamon j he'll join us with a cnbc investigation. there is someone who is mad at the irs and it's not why you think. before we get to that, though, we'll head to a break and on our wa way, we'll look at last week's winners and losers. [ mujahid ] there was a little bit of trepidation, not quite knowing what the next phase was going to be, you know, because you been, you know, this is what you had been doing. you know, working, working, working, working, working, working. and now you're talking about, well you know, i won't be, and i get the chance to spend more time with my wife and my kids.
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there are some indicator takes are signaling it's time for an intermediate term correction. so our next guest says caution is key. senior portfolio manager and manning director at wells capital management. m margie, why do you think caution is key? >> we're sure to see some disappointments and it looks as if we're taking a slow done here or pause. china is clearly decelerated. concerns about has the u.s. begun a much slower period. and i think those are the reasons why we could see the next few months be choppy with a down ward trend. >> you have a lot of people wondering if we're headed in to another spring swoon. geithner was on the talk show circuits and he said that's not the case, he doesn't necessarily think that's going to happen again because you tonight have some of the same issues out there that were there from the last couple of years.
do you think that's the case or do you think this is a situation where we kind of power right through? >> well, i think this correction will be milder than we've had the last couple of years. however, we still have great uncertainty in europe which can weigh on earnings for u.s. companies. and we also have some signs that looks as if maybe employment is slowing down a little bit. i think it will be a mild correction. but certainly there are things to be concerned about. >> if you think it's a mild correction, would you be telling people to buy on the way down? >> yes, i think that you don't have to hurry. the next few months will provide levels that are no higher than today. and i think we'll have a little clarity about what sectors are well positioned. but i do think by the fall of the year, we should see a much stronger economy and a much stronger equity market. >> the problem is that by the fall of this year, we're getting towards what's going to happen at the end of this year and beginning of next year, the fiscal cliff that we're facing in terms of the tax problems if there's not a resolution. there's only two months from the
election for the president and whatever the house and senate can set up to troo to come up with a solution. >> it isn't clear what is he going happen to tax policy, treatment of dividends, what kind of fiscal cuts will be in order, if any. and there's so little time as you're saying to make a resolution of this. i think that's the reason for people to be a little bit cautious. no reason to throw money in now. until we have a little bit more clarity what's going to happen in washington. >> okay. want to thank you very much for your time. >> thanks. >> we'll shift gears. how much do you think whistle blowers should be able to collect when they report wrongdoing to the irs? that's the question and i meamos is exfloring. you have to rat people out.
>> that's right. take as ls a lot of courage fore people. and now irs whistle blowers are blowing the whistle on the irs' own whistle blower program. the complaints by some whistle blowers and their attorneys is that the irs is slow walking or jamming up cases that they should be proceeding with leading to a massive payout of up to 15% or 30% of the amount collected. that can be millions. tens of millions of dollars in some cases. i talked to a whistle blower who says that the irs simply doesn't like whistle blowers. take a listen. >> while the whistle blower program is trying -- i'm sure they're trying to do their best, they're running up against a brick wall when they get to the irs establishment which apparently detests whistle blowers and thinks they don't really need them. >> so how much does he say the
irs owes him? he says that because of wrongdoing he turned in to the irs, the government has received over a billion dollars in tax receivables. >> i can't tell how much of the billion one they've collected so far is attributable to me, but if you take a conservative estimate of 50%, that would mean 550 pi$550 million and minimum , so they so he me something like $75 million. >> and while that sounds like a lot of money, whistle blowers and their attorneys say you need these outiz sood payouts as an ensend i have to get people inside the financial system and banking system to risk their careers and take on all of the burdens of being a whistle blower. a process in a can last years. the irs told me they think hair program is just fine and they have made payouts under the new rules.their
program is just fine and they have made payouts under the new rules. but they wouldn't tell me how much they've paid or who they paid them to. >> all right. appreciate that report. big news. >> you're finally doing it. >> breaking news banner. >> i swore i would never tweet or become a twit, but -- do you believe in a higher power? >> yes, i do. >> and so my daughter, she has a -- >> here it is. >> my daughter has a blog. and so i need to build up followers? >> yes, you do. >> and then retweet the blog or something? >> i found you. >> i signed up. i'm a twit. >> are you @squawk joe?
>> no. they have 2,000 followers. that's not me. i'm @joesquawk. but it's not set up yet. the background. and i don't know how to do it. >> but viewers can get ready to -- >> i can follow you anyway. i have to find you. >> i'm nervous. >> are you going to post photo.? >> about getting a tui. tweeting while under the influence. i'm worried because i'll tweet a picture of a wiener that i cook on on a grill so i can be like anthony. i say what's on my mind, so now i'll tweet whatever's on my mind. it's a ballpark frank. >> i'm still trying to find your account. >> probably not up yet. but it's in the process. >> have you determined your first tweet?
>> i'm going to be like becky. she tweets generic cpi. you're not like gwyneth paltrow. i don't know if you had a full colonic recently. have you ever gotten a twi? >> no. >> i'm worried about a twi. >> but i did do one thing really stupid. i wasn't under the influence of alcohol. but i was under the influence of laughing gas. and i tweeted that. that was an issue. i tweeted a picture of myself with the laughing gas mask on. >> are you doing facebook, too? >> i don't know. do i need to? maybe. i don't know how to do this. but it's joe squawk. >> i don't think it's on here. >> squatters need to move over. and then there's an i love joe kernen person, too. she has thousands. >> that's kind of cool. >> we'll get everything set up, figure out what's going on.
and we'll tell you his handle. >> it's like joe boxer almost, right? still ahead, sticking up for the little guy. i love this guy because he looks like -- right speak looks like the old buddy epstein. john you lieu hluther tells us keeping business up and running. ♪ ♪ [ male announcer ] not everything powerful has to guzzle fuel. the 2012 e-class bluetec from mercedes-benz. see your authorized mercedes-benz dealer for exceptional offers through mercedes-ben financial services.
so why exactly should that be of any interest to you? well, in that time there've been some good days. and some difficult ones. but, through it all, we've persevered, supporting some of the biggest ideas in modern history. like the transatlantic cable that connected continents. and the panama canal that made our world a smaller place. we supported the marshall plan that helped europe regain its strength. and pioneered the atm, so you can get cash when you want it. it's been our privilege to back ideas like these,
international franchise association. also nonexecutive chairman of both dunkin brands and arby's. sorry about that, joe. >> left to my own devices, i'd just say back this. we had sonic on last week. and one of the questions i asked is it's a million dollars for a sonic franchise. >> sure, to build the store out. >> and during the height of the crisis, there was no funding for that, was there, because mall b? >> the banks were holding back on lending and the small business community got hurt the most. so a lot of demand for franchising because the formula for franchising is it a very workable formula. it's been proven, it's been tested. so we have a very high success rate when you open a franchise store. and not just restaurants.
lodging, services, you have retail, you have a lot of other franchises other than food that need to get capital to get started and grow. and during the crisis, the banks held back and the demand built. so what we did through the ifa, international franchise association, withis is our seco annual small business summit. and we're bringing bankers together with franchisors and some of the administration folks, marty grunburg will be there as an example, to educate people how successful franchising is in this difficult market. and the banks are saying, oh, and the education is working and lending is freeing up. and karen mills has done a great job at the sba relaxing some of the rules there to make it easier on get the sba loans because approximately around 20% of all small business loans are
through the sba. so all this coming together in the summit later on today and tomorrow aids and abets the world of franchising which is a great business model for the small business. >> if we wanted to try to promote entrepreneurialship, is there a better way? >> there's a lot of multiple ownership. some build in a market and want to stay. market, so they'll bring several other franchises under their infrastructu infrastructure. >> three out of four times they fail, but -- >> the franchisor provides great
support, understand all of the finance has gone that goes on, we provide a support system and a lot of time like for instance dunkin and arby's have been around over 50 years. so a lot of work and experience making sure our franchisees are successful. >> we were chatting about this earlier, wall street has decided to start to securetize a lot of the franchise royalty fees. joe just mentioned sonic. the article points out they're doing this for sonic, church's chicken, domino's. and there is concern that you may be putting good credit with bad credit. if i'm looking at a bond that's securitized by royalties or franchiseses, is that a good investment? >> i would suggest to you to be careful as i tell everybody, make sure that you look at the franchisor, you look at the strength of the business, their recent performance.
for instance, about 2006 when dunkin and our sponsors acquired the company, we did securetize that debt. and when south in the '07, '08, '09 era, we refinanced into traditional financing. but it's like everything else. want to be careful about everysongle investment, especially during this economic period. there's so much uncertainty. >> there's been a lot of talk about burger king and the trouble it's facing right now. "fortune" had an article asking whether it was an example of
sears. it's so well known, it's so well loved. >> it's not loved. >> i love it. i love it. >> i don't like the char broiled burgers and they never got the fries down. >> i love it. i can't believe -- >> i like burger king. >> i do. i like their chicken sandwiches. what happened to a franchise that has been around for so long? how does it get into trouble like that? >> it's a great point. every period there's ups and down. i think burger king has had that. they ran into tough times because of competitive set, franchisees can't get financing, et cetera. they've just been acquired, think done some good work privately and i believe they're coming out with a public offering. so there's probably hope for that brand. but it's a competitive world. >> but you've got to reenergize
starbucks, too. dunkin has faced that. >> it's amazing, back in 2003 the challenge when i became the ceo of dunkin and the challenge kur , can you compete against crispy cream -- as you know, america runs on dunkin. >> by the time i get to the counter my coffee is ready every saturday. >> and he's following you on twitter, too. >> john, thank you. >> thank you. >> when we come back, david walker, grover norquist and
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you've heard of walker texas changer. "squawk box" has david walker, our special guest. the future of financials, an exclusive look at a new report outleaning the burden of dodd-frank legislation on the industry. and is now the time to sksh in on difficult depend stocks? we have a four-star fund manager who says not so fast. why names like 3m and home depot need to be in your portfolio no matter where this market moves. the second hour of "squawk box"
begins right now. good morning, everybody. welcome to "squawk box" here on cnbc. i'm becky quick along with joe kernen and gary kominski. let's get to your morning headlines. we are about an hour away from earnings on citigroup. we'll have those numbers and instant reaction as soon as they are out. there are some fresh worries this morning about spain's finances specific spanish ten-year yields rose above 6% this morning. those yields had risen above 7% last year. but that is seen as a tipping point. also, china has doubled the size of the trading band for its
currency, allowing the yuan to fall. it says the process correcting exchange rates are incomplete. the dow futures up about 44 points, nasdaq higher by about 6 points. s&p bup by 7.5. >> david walker rngs found are a -- founder and ceo. is this a record of how long it's been without a budget? >> over three years since a budget. >> has it ever happened before? >> not to my knowledge. >> how do you do it without a budget? >> we've only had a budget act since the 1970s.
we started doing the budgets in the 70s. we've only passed timely appropriations bill business the beginning of the fiscal year four times in the last 60 years. no new concept, no budget, no pay. if congress doesn't pass a budget by the beginning of the fiscal year, they don't get paid until they do and no retroactive pay. look, you and i don't get paid if we don't do our job. we need more accountability for these people failing to do their job. you have senator conrad trying to do his job -- >> he's a short timer. >> he's trying to do his job as chairman of the budget committee and his colleagues are criticizing him. >> let's get back to what happened then. we understand this is -- there's an election coming and it's a divisive time. what did the president propose that allowed him to get zero
votes? what was the -- what was the mechanism of what he was doing? what was the obama administration thinking why did it get zero and then we'll go on to the social dar n darwinism we're hearing on the other side. one gets zero and the other one you see grandma and grandpa out in the snow starving, supposedly according to the other side. >> it didn't adequately address the structural problems. >> why not? >> because it's an election year and because the president did not embrace simpson. bowles. >> he didn't get one person to vote for it? >> last year the president's budget was defeated 90 something to nothing. the white house is trying to spin that vote. you can't -- >> he doesn't get any democrats
to vote for it. >> bipartisanship. >> a rare show of bipartisanship. but rejection. >> and then paul ryan, the democrat brought the hammer down on his version of things. if you didn't look at it closely and you're politically on that side of the aisle or left, you think paul ridian is volderbar. is it that bad? >> no, he actually put a little more revenues on the table than he did last time. he modified what he was going to do on -- the problem i think is ryan's plan is too dramatic in what it's preposing to do and it didn't get asongle democratic vote. like the affordable care act it, didn't get a single republican vote. you cannot sustain something that does not get meet meaningful --
>> i just heard the affordable care act was passed by a majority. >> not a single republican vote. we're going to have to repeal and replace the bill. we need some level of universal coverage but it needs to be appropriate, affordable and sustainable. like preventive, wellness and catastrophic. >> and what about people who are not able to get insurance? you need something for preexisting conditions? >> you do. but if you strike down the mandate, you have all kinds of adverse selection. >> but if that's the bid and the ask, you have obama here and paul ryan here, it's like a stock that you're bidding 10, asking 400. >> going nowhere fast. >> nowhere near. >> look, we're not going to get a budget this year and the
reason we're not going to get a budget is because there's a wide gap between what the house passed and the senate -- pardon me, senator conrad may get something through the budget committee but it isn't going to go to the floor. so we're not going to have a budget this year again. so what we have to recognize is this year's general election campaign must make the, u that we're talking about, our nations deteriorating financial condition, fiscal responsibility, government transformation must be at the top of the jand. we must have substantial, we must have solutions because no matter who wents, the public has to be prepared, the president has too have a mandate because we must make progress -- >> wait a second. both parties will say when they win it's mandate and that he the reason to go so far in that direction. maybe they're right. maybe the country is divided down the middle at this point. is there some voting middle left that says we want these two sides to work together? >> first, if you barely win, nouts mandate.
secondly, if you don't lay out your agenda as to what you're proposing to do, there's no mandate. we now have a public that is not representative of or responsive to the public. we have 60% plus of the american voters who are not effectively represented because the republicans too far right, the democrats are too far left, the country is in the responsible center, they want results, progress not partisanship and they're ahead of the politicians. >> so you are a twit? >> a tweet. >> what's your thing? >> dave walker cei. >> how many followers do you have? >> i don't know. >> who do you prevent getting it twi? >> i told you, make the password so difficult, remember you were sucking down those guinesses, make the password so difficult,
you won't remember it. >> there we go. >> the higher power told me i had to start doing this. >> david, i want to come back to the deficit. because as you point out, that will be the major focus. the markets will try to bounce back. we made a breaking news, joe. joe is on twitter. >> what's a twit? a tweet? >> joe is on twitter. >> @joesquawk. >> we'll try to bounce back from the biggest weekly losses of 2012. dan genehouse, chief global strategist of btig. >> are you on twitter, dan? >> i am. >> make sure you follow joe. it's very important. >> i already signed up. >> you haven't got a twi either, dan? >> no, have i not. >> i don't know. the whole weinergate thing is --
>> it's pretty easy to avoid a weinergate. >> how? >> just don't do it. >> just say no? >> i'm going to get out of the way, grill ballpark franks, seasoned it out so i don't have the inclination -- >> i was told when i came on we would not be talking about this. >> you were? there's no guarantees here. >> what's your handle? >> i'm sw@dangreenhouse. >> it's not a regular occurrence yet but dips that used to be bought are now sold. action in the last hour of the day hasn't been terrific on a couple days. there's sm some suggestions perhaps heading into earnings seasons traders and investors
will take a little breather here. earnings growth in this quarter are not expected to be robust. consensus is around 1% to 3% so there's a reason to take a break here. >> you're the third person who sums it up that way, this idea the next three, four months are going to be sloppy but we'll see a sustained move higher later in the year. do you worry at all that's just really becoming the consensus you hear? >> i don't know that i agree with the entirety of that. historically when you have these types of rallies, on average the market a little higher in the three, six-month time frame later. then we get into david's area, the macro concerns, and ignoring the greek and french elections and the fact that we're going to run into the debt ceiling again later this year. the biggest single most important issue for investors as
far as i'm concerned is the fiscal cliff that comes january 2013. i don't know thattin vestors are paying attention to what happens, if occurs, will be catastrophic. >> right knew we're a safe haven but when you look at our federal debt to gdp, there are some rankings that show us behind spain. >> sure. ironically spain doesn't have a particularly egregious national debt problem. but, dave, as you ever know as well as anybody, it's the trajectory. i'm not one of those alarmists who say that we're greece today, tomorrow or the next day but i am someone who believes that to provide the foundation for a solid investing framework over the next seven, ten, 15 years, a down payment is probably not the worst thing in the world.
pretty clearly there is a direct relationship between the speed at which you solve that problem and the positive nature of its effects later down the road. that is to say, the sooner you start, the better the fektd. >> there's a piece going around this morning, jim o'neill at goldman sachs where he's saying he's wavering on this u.s. recovery, he's been very bullish on the program a number of times and he specifically points out about the weather having brought so much demand forward in the first part of the year. is that a thesis that agree with you? >> yes. i think economists would agree that the weather pulled forward some sales as we saw with the labor market,in employment as well. longer-term envesters look for undervalued companies that are performing well with good quality management and these minor economic debates, ie, with
the winter colder warmer than ear wise. from a trading standpoint you could see some payback. but at thend of the day if you are someone who believes this market is a screaming buy, then the amount of snowfall in february isn't really going to play into it. >> dan, thanks very much. make sure when you get out of that studio, tweet something, do it right knew. that's how you build the followers, the retweeting. >> i don't know. >> but you got to tweet first before they can retweet. i'm going to tell every guest ton here to retweet something to you today. >> but he has to tweet something. >> oh, man. >> you better come up with something good for your first tweet. >> i'm a total virgin tweet, twit. >> what a b a facebook?
should do i that next? >> no, twit ser much better. >> coming up next, randy neug burger. and later, grover norquist. >> many cog up comments from some of the biggest and brightest names right at your fingertips. squawkcnbc is our handing. -- handle. the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
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. a congress al report out today says dodd-frank has added 24 million man-hours of compliance a year. joining me is congressman randy neugebauer. congressman, that's a huge number. how did you come up with that? >> well, what we've been tracking is in the federal register, the reports from the various agencies as they put these rules out, they're supposed to tell us how many hours it takes to comply with it. of the 400 rules with dodd-frank is we're at 185. what's unbelievable, we're at 24 million man-hours yearly to
comply with that. it took 24 million man-hours to build the panama canal. >> that's just a huge number. do you have any idea like how that works out? what it manse for businesses on case-by-case basis? is that the number of people at every business that have to spend the time to get in compliance with these laws? >> what we know is when we talk to a lot of businesses that they're hiring a lot of compliance people but also the government is hiring a lot of people. 3,000 new workers. the estimate is that over the next ten years according to cbo, it will take about $27 billion out of the economy and that's on top of the millions of man-hours. as i said, we're only one third of the way through these rules and we're at 24 million man-hours. it's going to put a lot of burden, increase the cost of capital, availability and the flow of capital i believe. >> obviously you're not arguing for no regulation at all but how do you tell the good regulations from the bad? >> well, i think one of the things we should have done, one of the things we've been dmog our committee is we've been doing lot of oversight.
what we don't after 2008 is i think really do an autopsy on what happened and making sure that we went through the process. instead we threw this big burden called dodd-frank over the entire marketplace which makes it hard then to tell the bad from the good. we've got this 400 piece puzzle that we don't really know what it's going to look like when it's finished. >> i'm sorry, david walker is here. and heap has a question for you, too. >> hello, congressman. thank you. if the republicans take control of the senate, the house and the white house, what if anything are you going to do about this? do you plan to move legislation to repeal and replace? what do you plan to do? >> that would be a strategy. we haven't done a cost benefit analysis. the fed chairman said it was difficult to determine the cost and effect of this massive amount of regulations. one of the thing is think we have to do is go back and look at the various pieces of this,
determine whether it was cost effective to move down this road and if we didn't, we'd need to make adjustments in the legislation at that time. >> mr. congressman, as a former head of gao, i can tell you i think you're on the right path but i also think we need to do it throughout the government. the government has way too many regulations. we need to have fewer regulations that are clearer, can be complied with, coupled with enforcement. unfortunately the government has a lot of regulations that aren't enforced. that's one of the reasons we got into this problem to begin with. hopefully we with do it in not just this area, but across the board. >> that's an excellent idea that they weren't enforced. >> that's what i said all along, we didn't necessarily need regulation, we needed some regulators that would do their job. they didn't do their job and we've seen the consequences of
that. events we've seen recently are because regulators didn't do their job. >> congressman, is there a very quick way that you would simplify things and say what happened? some say leverage got out of control. some said the fed needed more oversight over bankszip think we hit the pause button and ascertain what happened. >> but it's four years later and we still haven't figured it out. that's a problem too. >> which is the unfortunate part. we should have started our homework in 2008. instead we jumped to the solution before we knew what the problem was. >> congressman, thank you for coming on today. >> thanks for having me on. >> we're going to do the animal orchestra. then we're going to do a tweeter
tutorial? >> a twitter tutorial. >> i'm going to tweet at 7:50. you'll show me how and i can send out my first one. >> yeah. ready? >> i don't know. 7:50. i'm going to do that. is rovell on board yet? >> you know who else has to do it? sorkin. >> sorkin's got a ton of viewers, too, followers. >> coming up, more with guest host david walker. it's an historic day with you being here and all. i thought would you have retired because of the buffett rule. isn't your job done if we pass the buffett rule? >> i'm not for the buffett rule. >> we'll talk more about that. time now for today's aflac trivia question. which two countries share victoria falls?
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welcome back to "squawk box," everybody. among the stories that we're following on this monday morning, nasdaq has shortened the time a company needs to be listed on a major exchange to be included in its indexes. the new requirement is three months rather than the prior two years. the nasdaq news release doesn't
mention facebook by name but it will obviously speed up its inclusion in the nasdaq 100 when it goes public. texas instruments will join that index after dropping from the new york stock exchange to the nasdaq in january. toy maker mattel is reporting earnings. revenue is falling short because of the barbie and hot wheel brands. hard to imagine. >> mike clarfeld runs the morningstar. up 9.2% over one year. i'm never sure to go for the big payers or whether to go with the 2.5s that are going to grow at 15% a year because they're, you
know, they still got it going on instead of the more established companies. do you have a combination of both? >> i think that's exactly right. investors need to focus on a combination of both. i think lots of times, especially in an environment like this, it's easy to get enticed by the 4%, 5%ers. the reason we buy equities is to participate in the growth of the company over time. we think it's really important to balance that up front yield with the growth. it sounds like mom and apple pie but we all know the basics of equity investing. eight compounding of dividends overtime and it will add high income growth as dividends increase. >> what would you look at to know or to be able to pick a company that's going to have a higher than average dividend increase each year, compound dividend increase? what is the metrics that you'd you'd look for?
earnings per share growth, revenue growth or profit margins? >> it starts with a deep analysis of the business. it ends up being a pretty fabulous screen for companies. when you focus on company who you think have an act to grow dividends at a powerful rate, we're focused on companies with sustainable recurring revenues, companies that serve really large markets that we think don't face sort of obsolescence or aren't competitively going to be diminished overtime rngs businesses and industries that are going to be around, strong return on capital, we need companies that can over a cycle earn pretty fabulous returns on investment and ultimately the ability of the company to convert that revenue into high margins and returns that gives us the confidence that a company can grow its dividends a earnings powerfully. >> pike, you run one of the type of firms that a lot would anticipate would be aggressive buyers of apple.
did you own apple and were you buying it when they announced the difficult candidate? >> and certainly one of the two stocks that didn't pay dividends before we ond it. we own apple and berkshire hathaway. we were there for quite some time. it's been a great stock. we were very excited to see them pay a dividend. >> there's a lot of regulatory uncertainty, especially with regard to health care. how does that weigh into your analysis? >> that's a great question. let me start with taxes. clearly any increase in tax rates is a negative, nobody likes that. but we don't think that's going to derail the dividend investment story at all.
that's for two reasons. first off because when you compare equities to alternatives, if the tax rate on dividends goes back to the marginal tax rate, it going to be taxed the same as most other alternatives, whether that's taxable bonds or someone had an investment in real estate. the only area that really stands out is municipal bonds and tear talking on raising the tax on munis. why are people going for dividends today? it gets back to what we talked about earlier, which is it's not just the up front yield, ilt the combination of income and growth. whether it's an individual investor who needs money for retirement or the institutional investor, that it's up front growth. that's going to be just as important. >> the thing that scarce me is not the dividend that you get but the prospects for the stock market, mike. that's what scares me about raising the rate because if, you
know, you were to base the valuation of the stock market on the after tax -- market on the after tax dividend yield, if this goes to -- if your after tax return goes to half what it was, then this market is much more expensive than it is at what the after tax return is on a dividend right now. i would not necessarily think people are going to get out of dividend stock bus the whole market becomes overvalued based on the after tax return if we're going up to 40% or something. >> that's a good point. i think the think i'd point out is, number one, we don't know where the tax rate are going. >> they're going up. >> you we don't know for how much and what income brackets. and i'd argue while you're certainly right, the alternative is far more expensive than the equity market. >> all right, appreciate it thanks for your time. >> jim o'neil is going to call
in to squawk tomorrow morning. becky tweeted that. >> oh, is it wednesday? >> becky tweeted that. it came to me. >> it's @joesquawk. >> when we come back, we'll talk to david walker and citigroup's results. >> tomorrow on "squawk box," a flood of earnings reports, coca-cola, goldman sachs and johnson & johnson, all expected before the bell. plus, it's trump tuesday. donald trump will talk politics, jobs and the economy. don't miss "squawk box" tomorrow starting at 7:00 a.m. eastern.
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the comeback initiative ceo. we were just talking off camera about the deficit and how you really tackle it. you run the numbers, do you it from a nonpartisan stance. what do we need to do if we are serious about tackling the deficit? >> we need to understand the difference between the short term and the structural. the threat to us is not today's deficit, though it shockingly high, 1.3 trillion. it's not today's debt, 16.6 trillion. it's what lies ahead. the titanic's 15th anniversary of the sinking -- >> hundredth. >> i apologize. what sunk it was not the ice above the water, it was the ice below the water. those are the off balance sheet obligations, 50 trillion plus, 9 trillion for social security. we need to recognize that starting in 2013 we need to start taking steps to bring back budget controls because they expired in 2002 but we have to do it in a way that doesn't
undercut the recovery, our efforts to try to get unemployment and underemployment down. we have to reform social insurance programs, social security, medicare, medicaid. we have to rationalize our health care promises. we need to cut defense spending and constrain it without compromising national security and we're going to need come come -- comprehensive tax reform. that's three parts spend reing reduction, one part revenue. how we run them matter. >> revenue increase, spending cuts and how you reduce the deficit at a certain pace, what is that ratio? >> it's three part spending reduction, one part revenue excluding interest. but in the short term the ratio is going to be different because a lot of the spend reeg ducks are going to be due to the power of compounding. if you make modest or moderate changes to social insurance
programs, you phase them in over time, you are don't save a whole lot of money in the short term, you save huge amounts of money over time. the ratio over the longer term is 3-1 excluding interest but in the shorter term it more balanced. not 50/50 but more balanced. >> every time we bring that up we have people who say wait a minute, i've paid my social security taxes my whole life, it's my money and i want it back. >> we need a safety net for social security, medicare, medicaid, et cetera. most people have not paid enough in taxes ees to equal the amoun money they've receive in social security. for medicare, 95% of people who sign up for those benefits get a 75% taxpayer subsidy, irrespect
i of their income and weather. 95% of people get a 75% taxpayer subsidy for their premium irrespective of income and wealth. there's a lot of disinformation and misinformation out there we need to deal with and many of these phasing will be phased in over time so they can adjust and plan accordingly. >> one you start looking at changing to the tax codes, there are people who say you can bring tax rates down if you get rid of the loopholes. there was an article that said three of the issues are very popular programs, one will cut the tax basis you get back for 401(k)s and iras, another would have to go after the home deduction and another is the health benefits that employers
pay for. >> first, we lose $1.1 trillion a year in revenue because of deduction, exemptions, credit, exclusions and credits. in my view we need to dramatically broaden the base, take the top rate down to 25%. if you take the top rate down to 25%, can you eliminate the difference between capital gains, dividends and ordinary income and let's talk -- >> does that mean bring all those up to 25 from 15%? >> so a flat tax essentially on all money you have coming in. >> not total flat but flatter. the top rate will be 25. health care is compensation. and we need to phase out the special tax treatment for health care. the largest tax preference we have in the internal revenue code is the fact individuals don't pay income tax or payroll tax on employer provided or paid health care. that needs to go. three key exception. charitable contributions.
people ought to give a full reduction for charitable contributions. it's going to spend less, ask for new revenues so the charitable sector will have to do more. mortgage interest deduction. one home, not two and nowhere in the country is it a million dollars. and we need to provide tax treatment for investments and savings and lock the money up for retirement. we have way too much money coming out preretirement. if it's death or disability, fine. but we have lot of money that gets lost and yet we're given a tax preference for people to say for retirement and they're not using it for retirement. >> isn't there a penalty if you take it out early? >> before 59 1/2.
you know how consumption oriented our society is. people want to consume today, they'll worp about it tomorrow. >> look at how many people took loans out of their 401(k)s over the last five years. >> also had huge unemployment, though. >> right. a lot of 401(k)s turned into 201 ks. we have to recognize the compounding effect of all these factors. >> so that's the game plan for this, you can look at something where you get 25% rates but you're going to have give up a lot of things people don't ant to give on, capital gains and dividends up to 25% and get rid of things like health care -- >> i heard our earlier guest say that wouldn't be the end of the world because you have to look at the alternative investments if you will. i think the key is we need to increase the effective tax rate but the buffett real rule is not the way to go. we need to do it as part of comprehensive tax reform. we have a lot of people not paying any income tax in this
country. 35% to 50% of americans pay no income tax -- >> but the argument back is they do pay payroll taxes. >> but those aren't ready to fund social security and medicare. that's a dangerous disconnect in the democracy. >> why do the payroll taxes cap out at a certain amount? >> they don't for medicare. for medicare they don't cap out, it 1.45% for employer and individual unlimited on wages. for social security they cap out -- >> tease a really regressive way of taxing it. gli this one of the things to put on the table is to raise the wage base tax but not eliminate it. if you eliminate it, it's a 12.4% increase. we need more revenues but how you generate the revenue matters. the biggest problem is spending. spending is out of control. both party are responsible for
that. >> we're going to have a lot more with david throughout the show. >> i know we got to run as we're focusing on the u.s. yields on the spanish ten year back above 6% right now. >> i guess 7% is the point people look at as a key dropoff rate. we'll continue to monitor that through the morning. when we come back, we're going to get joe's twitter tutorial. >> you're going to do it. >> i am. i'm going to teach you. >> the blind leading blind. >> i am a little blind but i know more than you do, if that's saying much. and in the next hour, securing america's energy future. fred smith teaming up with bob lutz with a plan to get america off foreign oil. we'll be right back. still to come, citi hits the street. the financial giant reports quarterly results. we'll break down the numbers and tell you what it means for the markets . duff & phelps finds
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turned him. >> i'm afraid to get a twi -- >> which is? >> a tweeting while intoxicated or tui. >> my password. >> you make it so hard. if i'm blurry. you can't start your car unless you -- >> the reason people follow you is because they're waiting for you to fall off the wagon and go ahead and tweet something. >> have like an anthony weiner moment. there's not going to be. >> you need to know how. >> i don't know how. >> so take a look. >> i got 1,300 -- that's the real one. the @squawkjoe -- >> that's not the run. what you do is you type your tweet right here where it says compose your tweet, you hit
enter and you are out there. >> you can only go? >> 140 characters. >> that includes everything? >> that includes everything. anything more than that, it gets chopped off. >> you have to learn the abbreviation. >> roltf. >> rolling on the floor. >> have i to learn all of that stuff, right? >> how much time do we have left? any gentlemquestion sfsquestion >> i have a lot of questions. >> these are suggestions are who you might want to follow. >> who is making those suggestion ps. >> based on who you're following, you might also want to follow these people. it's that amazon things, based on what you ordered, you might like these things. >> you know what this is all
about? i told you a higher power. my daughter has a blog and i got to mention her blog and tweet it to all my people. >> peaceprofits.com. >> there's a lot going on. have i asked sorkin -- >> oh, sorkin can help you, my friend. >> as soon as you put a tweet out there -- >> but can he say follow me now? can he do that now? >> yes, as soon as you put something out. >> i messaged rovell. >> you better do it, rovell. this is jack welch. >> he's the master. he has over 1.2 million followers. >> i don't want to make this a big deal or make it important. i couldn't think up my actual first tweet. >> people are holding their breath for this. it better be good. >> the managing editor of social media is right here. that's one small step for man, one giant tweet for mankind.
i didn't want to make a big deal out of this. i didn't want to harkin back to any. but i that? >> because tweet rhymes with leap. >> i'm always thinking about the investing angle. if twitter says they're going to go public as a result of this, then we're going to have to figure something now. >> what does that say? >> i have one tweet. don't look for a lot of these. how often do i need to do this? >> you know what? i have to go to the bathroom. can i tweet that right now? >> no, no, this is too much! we have much more "squawk box" after the break. including earnings from citigroup. >> this was a huge success. >> it was. >> coming up, a tax cutting champion. grover norquist talks about shrinking the government, the buffett rule and the battle on both sides of the aisle.
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citigroup. >> 95 cents but $1.11 excluding highs. citigroup revenues of 18 billion in the first quarter, including negative 1.4 billion of cva/dva. >> it is a number that it's not pure gap, it's gap minus items. the estimate was for $1. it's $1.11. that's nominally above expectations. >> the stock is trading below where it closed on friday. >> return on equity in the quarter was 6.5%. we're going to watch to see whether there's any comments on whether they try and go back to the fed and ask if they can do a payout, right, whether they're going to be able to do any type of dividend or what they were turned down on, which was a shocker last year when that happened. >> loan losses was 29 billion at the end of the quarter or 4.5%
of the total loans. >> what about bringing back reserves? that's one of the things people said about jpmorgan and wells last week. they were able to do better by bringing back reserve. >> they talk about their allowance for losses, 4.5 of total loans compared to 5.8% in the prior quarter. 1.2 net release of loans in the quarter. the company is also making comments. talking overall about what they say in terms of the operating environment. they say it improved in the first quarter but there's still much macro uncertainty and that we will continue to manage risk carefully. they say they continue to manage the depth and scale of local presence. they say there is a lot of macro
uncertainty. >> and $50.90 a share. >> is it safe to say after friday, expenses were growing more quickly than loan origination and some of the good numbers, they were questioning the quality because of the reserves brought back. >> it's interesting, because they took a hit when they took the reserves on and they'll take a hit when they take them off, too. >> people have already voted with their feet on friday with the two big quality banks. who knows whether they do it again today. >> already we should point out the bid/ask has come up a little bit as peel get a realization solve that includes that negative drop down. >> and we'll dig more into the expenses. the financials were the best performing sector in the s&p in the first quarter. >> right. >> a lot of expectations built
into the stock. soy the action on friday given what had already -- the keefe index was up 25% in the first quarter, reflecting a lot of the positive things that we've seen, if there are some positives here. >> let's get a check on the european markets with all this in mind. the spanish ten-year rose above 6% again this morning, the high since the new government took over in december. those yields had risen above 7% last year. european ek quits, though, after i pretty bad week and lousy friday are at east up a little bit today. >> while yields aren't at those record highs, spanish debt is right now. >> the senate is set to vote on the buffett rule which would raise taxes on millionaires and billionaires. joining us, grover norquist, president of americans for tax reform. always a pleasure to have you on. thanks for being here i'll tell
you, all -- the entire show and just about every show, it just a sort of, i don't know, in the future taxes are going higher. should we assume that? and will that be something that -- that you could finally feel comfortable with if it was done in the right way? >> well, there's a decision to be made that's november and the presidential election. if obama is elected, there are $4 trillion or $5 trillion in tax increases that click in january 1st automatically and even a republican house and senate couldn't stop that. if romney is elected, he's made it clear he wants to do revenue neutral tax reform along the line of paul ryan's plan. so there are two different futures. someone dramatically higher taxes to pay for obamacare and obama's larger government. the other is to get rid of
obamacare, bring back obama's overspending and not raise taxes as a percent of gdp. >> grove, thanks for coming on. >> good to be with you. >> obviously there's growing consensus we need comprehensive tax reform that will make the system simpler, fairer, more equitable, among other things. if we look back to history, ronald reagan's tax reform act of 1986, if we took that type of approach to go about tax reform, how would that comport with the pledge that atr has and what, if any, comments or thought do you have about that? >> sure. the tax reform act of '86 was revenue neutral approximately reagan insisted that it was. he was negotiating with a democrat house of representatives and a prereagan reap senate. the real danger is no 86, which had many good part, as well as some problematic parts to it.
in '82 the government said we'll cut spending $3 for every $1 in tax increase. the $1 was real and we're still paying it and the $3 in spending restraint never happened. in fact, spending went up $2. and they offered $2 of phony spend reeg ducks for every $ $1 of real tax increase. we're still paying those tax increases. the spending cuts never happened. spending went up, not down, after that deal. so when the democrats offer you spending cuts for tax increases, we know from history that tax increases are real. the spending cut are not only smaller than you'd like, they don't exist. >> grover, it seems that one of the debates that's going to unfold in the coming months is what's the benchmark for revenue neutral? let me clarify what i mean by that. right now we have revenues of
about 16% of gdp roughly. the historical average over the last 30 years is about 18.3% of gdp. if you look at what current law is and nobody's comfortable with current law, i know you're not, i'm not, revenues would go to 23.3% of gdp by 2035 and rising. one of the real debates is what's the benchmark? today is kind of extraordinary times and we have to look ahead with regard to things like demographic and health care costs. what if anything thought do you have about that? >> what paul ryan and the road map have put forward is to maintain tax revenues at the historic levels, 18.5%, not allow that to drift upward. the challenge with giving the government more money is that it tends to spend it. the good news is that the american people understand that in the polling data, that the tax increases that the -- if you
tax the rich first, pot democrat practice trickle down taxation. the buffalo rule will only hit people today. the alternative minimum tax was targeting 115 people back in 1969 and on january 1st of 2013 will hit about 31 million people. so the buffett rule is to soften you up to loot you. has nothing to do with buffett. it has everything to do with looting the middle class. obama's own budget admits to overspending $6 to $7 trillion over the decade. he's going to take $40 billion from rich people and $7 trillion from you and me. it's a little obvious on his part what he's doing. he's trying to distract you over here while he picks your pocket. >> grover, clearly i think at&t has got to go. to me it's a bait and switch sur
tax. the people who get hit the wealth are poem in the middle, you get interest on a first morgan, and charitable -- >> the buffett rule is the an mt on training wheels. >> buffett himself is saying that's a band-aid fix. these hiing about it in terms of optics rather than in post -- if you were to look at the situation and if you were to raise, as david walker suggested, raise the capital gains tax and raise the dividends tax to 25% to create more of an equal tax so you're paying 25% on any type of income that you bring in, not just stuff you're getting through payroll, would you be okay with that, grover, bringing up those taxes to 25% in order to -- a maximum rate of 25% if you bring those up across the board? >> the challenge with raising the death tax, which obama wants to take up to 55% now and the
difficult depend tax, which obama wants to take up to about 45% and capital gains, lord knows what he wants to take, 430 is the opening bid is those are taxes on second taxes and third and fourth taxes on money you've already earned. >> but by now taxing -- let's forget about the death tax and about the 30%s are 40%, 50%. >> i'd like to. >> if you were just to take capital gains and dividends to 25%, which is something david walker laid out earlier as part of a solution goating to a more fair tax rate, the problem is if you look at the very richest americans, the 400 richest americans, their tax rates have gone down. you can have people paying 12%, 13%s are 14%, while people making much less money are paying 25%, 35% in taxes. is there a way often that out so the richest americans are paying tax rates that are more equitable than people paying higher rates?
>> we do that by taking wholt tax rate down. there's no reason 25 should be a final resting place. 25% is too high. a lot pearn european companies have lower marginal tax rates for all citizens, flax rate taxes. if we grow at 4% a year instead of 2% a year for a decade it, brings in $5 trillion in additional revenue without raising taxes. i'm muff more interested in having more revenue for the government from serious growth and job creation rather than chasing revenues that will never happen. raising capital gains will not get you more money. >> can we solve our deficit, though, david, if we go below 25% and bring the rates down to let's say 15% sm. >> we're going to have to have more revenue. it's simply math. the reason being is we have over 50d trillion in off balance sheet obligations, $37 trillion for meld care, $9 trillion for social security. those numbers grow faster than inflation and faster than the economy when the economy grows.
it's just a fact. spending is a major problem, there's no doubt about it. it's out of control and we're going to have it recapture control of the budget. when you talked about the kaiks and dividend rate, that's bringing down the top marginal tax rate across the board for individuals, corporations and thees tax to 25%. that's the important part. >> and getting rid of loopholes. >> correct, getting rid of loopholes. exactly. >> do you have figures, david, on the top 1%? i've seen that the number that actually pay 15% is small. ailts average of 26% and the average middle income people pay 15%. it's almost a specious argument to begin with. >> the latest i've seen people that make over $1 million a year have an effective taxable rate of 18.9%. and the reason is because most of the very wealthy people make money through capital gains and dividends. that's understandable, okay, and
that's taxed at 15% no matter how much money it is. >> the top 1% pay about 40% of all the income tax. i understand why obama plays this game with marginal tax rates. in terms of who is paying the bulk of the taxes, we have been extremely progressive, soak the rich tax policy, even compared to europe. >> we're talking about two different issues. we're the wealth pay a significant majority not only of income taxes but of oat al taxes. depending on the year anywhere from 35 to 50% americans pay no taxes at all. that's a dangerous discorrect in a democracy. >> you just mentioned wealthy. that is a big issue. grover, when you think about the -- collecting taxes from across the country, what is wealthy? >> okay, two things. i think people should say -- pay roughly the same percentage of their income. luckily when you ask the american people, that's what
they say as well. i'm from -- originally from massachusetts, which has been constitution a flat rate income tax. five times the big spenders in massachusetts have put on the ballot let's go away from a flat rate, single-rate tax to a graduated or progressive income tax. five times that's been defeated. average voters, average citizens understand that if you raise tax -- ted kennedy's taxes today, you're going to be connelling back for me in the future. if you divide people by economic class like some european welfare state, that eventually you'll divide us into different groups and raise our taxes one at a time. the best defense for taxpayers is to have everybody pay the same rate, everybody know what is they're paying, all those loopholes allow the demagogue that rich pair aren't -- let's
reduce it and make it much more transparent. if we allow the politicians to divide news different groups and take us out of the room one at a time to get mugged, we're always going to be in trouble. that's what the buffett tax is about. it's about preparing you to be out of the room next. >> thank you, grover, very much. >> thank you. >> there's a key issue here about tax fairness and the come back america has a new myth we're dispelling. it's more than rich versus poor. people o make the same a income ought to pay rockefellughly the amount of taxes. >> i've never understood the tax code. >> the second is intergenerational. we're not paying our way. that's one of the reasons why you need to have an estate tax
but a much lower effective rate, higher exemption because people aren't paying their way today. we have a $1.3 trillion deficit in year. this is the fourth year in a row. we mortgaging the future of our kids and grand kids, reducing investments in their future at a time they're going to have -- >> i'm all in favor of simplifying the tax code. we need to get back to reform where people can understand what you're doing and not have an accountant figure it all out. >> i'm a cpa. i can do my own return by hand. if members of congress had to peep their own taxes by hand, they'd have to have software because they couldn't do it. >> we just heard from citigroup. >> still ahead, we'll talk america's energy future with two guests who know the energy sector well.
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welcome back, everybody. we been talking about tax reform, spanish yields pushing back above 6% this morning but through it all the futures are hanging in there, up about 27 points, the s&p up higher by just a fraction of a percent. toy maker mattel taking a hit, it earned 6 cents per share, a penny below what the street was expecting. part of it is because sales of barbie dolls and hot wheels were a little weaker than expected. hard to believe in our house. we have plenty of barbie dolls around. >> maybe too many kids on twitter following joe kernen now. >> joining us on the squawk newsline, gerard cassidy. is $1.11 versus the consensus that the right comparison? >> yes, it is. the number was better than expected but it is the correct
comparison. >> on the revenue side, it looked like some segments in line, some above, some below. >> total revenues were in line to a smidge better. within the division, the consumer area was quite strong, especially in the north american area for citigroup but also capital markets similar to what we saw with jpmorgan on friday, very strong fixed income trading numbers. >> in terms of returning capital or returning more capital, does anything today change the outlook, the timetable of being able to return future capital to shareholders here? >> i think what we'll see is that citigroup is going to obviously reapply to the federal reserve to return capital sometime this year and i think these numbers support that type of effort. the numbers overall were good. expenses were under control. this company as you might recall has been criticized for not controlling operating expenses and operating expenses were flat
year over year and down from the fourth quarter. >> we talked about the expenses. so the expenses were basically consensus in line so there's concern about creeping higher expenses in 2012, we can put that to bed now? >> at least the first step is correct. the company has demonstrated here they appear to have themnd control. that war is going to be ongoing for a long time but it was a very good step in the first quarter. >> now, with in stock, a lot of analysts talked a year ago about normalized earnings. it was a big group, citigroup normalized earnings. are we back to what that level should be or could be? >> not yet. one of the reasons being is citiholdings has come down very nicely, 11% of total assets. that's where all the toxic assets are from the '08/'09 meltdown. that number needs to get close to zero before we can say we're at normalized earnings. >> what would that normalized number look like in your mind?
>> i would say we're pointing to a number about 1% on assets from city, anywhere from 90 basis points to 1% will normalized for us and we're not there yet. >> gerard, thank you. >> you're welcome. >> still ahead, we'll talk energy security with fedex chairman and ceo fred smith and vice chairman joe lutz. [ nadine ] buzzzz, bzzzz, bzzzz, bzzzz,
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welcome back to "squawk box," everyone. in our headlines, the irs will square off with bank of new york mellon in tax court today. at issue is whether complex cross-border deals that barclays structured were an abuse of tax shelter. also carlisle is looking to raise up to $763 million in its ipo. the private equity firm is expected to file an ipo registration document today stating that it's looking to sell 30.5 million units at somewhere between $23 and $25 a unit. joe, over to you. >> coming up, breaking economic data. retail sales numbers for march just a few minutes away. "squawk box" will be right back. ? slip-on's the way to go. more people do that, security would be like -- there's no charge for the bag. thanks. i know a quiet little place where we can get some work done. there's a three-prong plug. i have club passes.
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. welcome back to "squawk box." we are just seconds away from retail sales and empire state data. rick santelli would normally -- he is going to join us. he's standing by at the cme group in chicago. rick, i hope you've been -- that's the problem is you have to be on the air at the same time that we have these form today. i guess now we're having a problem actually with the shot to have rick. so it's going to be my opportunity to bring you the numbers and then i'll be tweeting the numbers. the numbers, please. you're going to give it to me in my ear or is rick there? >> hello! >> up 0.8 -- >> there's rick. >> rick, you got them? >> sure, up 0.8, yeah. if you take out autos, you're up with 0.8, and empire is a major disappointment. we were looking 18.5 to 17.5 so
6.5 is on the weak side. so all in all, and we still have tick data coming up at the top at the 9, i like how tick data is progressing. this number is progressing, something the market is going to pay attention to. we see the interest rates are well below 2% on a ten year, that's partially europe and partially what's going on with some the data from last week. but this data is very strong. we want to see how this balances out, joe. it should be an interesting day. spanish ten-years are at the highest yields since early december, italian yields are moving up. here we have our economy doing better, at least based on retail sales. back to you. >> all right, thanks. we'll keep an eye on that. we have more data coming later in the week. more now from our guest host. you've been over here stewing and thinking about all kinds of things. the numbers that we were just talking about in terms of the --
you heard grover norquist say the top 1% pay how much? 40% of the taxes. >> yeah. there's a difference between how much they pay in taxes and what their effective tax rate is, okay? and one of the reasons that's the case is because depending upon the year, you've got 35 to 50% of americans that pay no income tax, all right. so we have to be careful that when we're talking about these numbers that we're talking apples to ams. the bottom line is we need comprehensive tax reform that will make the system simpler, fairer, more equitable, more competitive and generate more revenues but grover's right ush got to have constraint on spending. we need to reduce spending, we need to have constraints. only 38% of the budget is constraint. the rest is on auto pilot. social security, medicare, medicaid, agricultural subsidies. in addition, these tax preferences are not constraint.
so we're out of control. absolutely out of control. >> the receivables run at about $300 billion to $400 billion a year, money owed the irs under the tax regime but aren't collected. the so-called tax gap. >> in other words the estimate of how much we should be collecting but don't. >> that's a fancy way of being polite. this is people that should be -- not just people but uncollected taxes. i mean, is that not obscene? >> it is obscene but the only way you're going to get that is, a, more reporting and, secondly, moe withholding. a lot of this is people that aren't claiming income, whether it's contractors or people that are getting tip income and things of that nature and they're not claiming their income. you have to have more withholding or reporting to get at it. >> or some kind of flat tax or consumption tax. >> they still have to claim the income. >> after we end up getting tough controls on spending, then we immediate to consider whether or
not we have standby value added tax but after controls on spending, i mean real controls. >> in joe's scenario, there's no problem collecting because every time there's a collection made -- >> we're the only industrialized country that doesn't have one. you need to make sure you have constraints, hard caps and constraints on spending before do you that because if you have a new revenue source and you haven't controlled spending, it's very easy to turn that revenue source up. the government spends $1.40 for every dollar it takes in. that's not a sustainable position. >> david, if you look at what happens, though, at the end of this year, people keep talking about the fiscal cliff that we're going to plunge off of. i know we can all say look back at 1986 and look at the way that both sides came together and were able to hash out real changes to simplify the tax code. but if you've got eight weeks to
figure that out after the election, what's the odds we're going to see anything that is a good, thorough, thought-out plan? >> we're not going to have comprehensive tax reform in the eight weeks between the election and the new congress comes in. we are going to have the mother of all lame duck sessions because you have the bush-obama tax cuts expiring, the temporary fix on medicare position payments and unemployment, the sequester that's supposed to come in for defense early next year and we could have the debt ceiling limit come up. i think they'll reach some type of agreement and but for the big stuff, they will probably kick the can down the road maybe a year, all right -- >> again? >> with target enforcement issues and move to 2014 with comprehensive tax reform -- >> we have a fed manipulating interest rates. you haven't discussed if that's the scenario and the fed wasn't involved, what would happen to
our borrowing calls in. >> the largest hoder of our debt is the federal reserve. we're self-dealing in our own debt. rick said we've got the ten years now down below 2%. we have the lowest interest rates in history and the lowest average maturity for any major sovereign nation. it costs us $150 billion for every 1 point in interest rates for which we get nothing. the 2012 election must make fiscal responsibility, government reengineering and political reform a top priority. we must make progress in 2013. on some rankings, spain ranks higher than us. >> okay. on that cheery note, david will be with us the rest of the program. when we come back, we'll talk about reducing america's dependence on foreign oil, business and leaders partnering
up to promote energy solutions. we have fedex chairman and ceo fred smith and former vice chairman bob lots. they'll be joining us right after this. >> tomorrow, donald trump and a special extended interview with former bear stearns chairman ace greenberg. wednesday we'll talk politics and commit with carl forinia, plus earnings from bank of america, dupont, morgan stanley and verizon. and friday we'll close out the week with pnc chairman and ceo jim rohr and earnings from ge and mcdonald's. keep watching "squawk box" on cnbc, first in business worldwide.
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welcome back. what can be done to improve energy security in the united states? joining us is fed smith, the ceo of fedex. bob lutz is the former general motors vice chairman. gentlemen, what can be done to try and secure our future? >> well, bob's asked me to kick off here. the energy security leadership
council is a group of retired four-star -- electrify short haul and lut-duty transportation, move to natural gas for heavy-duty vehicles, institute fuel efficiency standards and continue r & d on biofuels. >> gentlemen, this is a plan a lot of people should be paying attention to. high oil prices hurts us from a security perspective when we're sending money to people who hate us for oil and it's something you point out in an op-ed piece that you wrote that it certainly that we should be concerned about because of all of the tax cuts we've seen from 2002 to the
present day have been offset by higher oil prices. this is something that makes sense from a lot of different perspectives. i wonder why some of these plans haven't gotten more attention from congress to this point. >> i think one of the reasons we're in washington today is to talk to several conservative groups. as i've pointed out in my blogs on forbes.com is there's an almost irrational opposition on the part of many conservatives toward the electrification of the automobile alternative energy sources. many of these things are being laid at the foot of the obama administration and saying these are basically environmentally oriented programs that have to do with climate change and therefore we must oppose them. this isn't the case. this is not about liberal programs and changes society. this is about energy
conservation and national security by getting us off of imported oil. >> bob, we had -- santelli looked at natural gas conversions last week or the week before. there's something about the vote when you take all the subsidy money and divide it by how many have been sold, what is it, look $250,000 of -- what's that number? >> these figures are totally wrong. first of all a volt with tax subsidy runs about $37,000. as gasoline gets to about $4, $4.50, this is going to start making sense. >> but to develop it, what the government has in the development of it -- >> wait a second, wait a second. the government bailed out general motors, that's true. this government had absolutely nothing to do with the development of the volt. in fact, steve ratner and the team were in the process of killing it and we argued at
general motors that this car should go forward. the first volt was shown at the detroit automobile show in january of 2007. last i checked obama was elected in 2008. and the federal tax credit of $7,500 was instituted under the bush administration. so it bothers me when conservative news outlets don't get their facts straight. >> i mean, you've seen the headlines. gm estimated they've sold 6,000 volts so far. that means the subsidy is 250,000 per volt. that's not the amount of government money that went in to develop it? >> absolutely not. >> okay. >> joe -- >> go ahead. >> you're looking at this problem from a pure market perspective and the reality is there is no free market for oil. the market for oil is controlled by a cartel, opec.
they own 80% to 90% of the reserves in the world. they produce about 42%. last year the united states sent $328 billion offshore to buy imported petroleum the cost for the average family went up from $1,700 in 2001 to $4,000 last year. we spent 60% of our balance of payments on imported petroleum. >> this is in michigan, center for public policy that said that there were 18 different government programs, rebates, grants, loans and tax credit, there's a total of $3 billion in subsidy, including $3.2 billion in federal money, 690 million from the state of michigan, divide that into 6,000, that's how they got the number of $256,824 per volt. >> what's the subsidy for a navy
aircraft carrier or f-35 fighter? it's exactly the same thing. we continue to look at this as a market issue and it's a transition issue where we have got to get off reliance on imported petroleum, as becky said, from parts of the world where a lot of people wish us ill. that's the issue. eelectification is just part of it equation. >> and natural gas would work, too, with the trucks. how come it doesn't work with cars? bob, you're a gm guy. wouldn't natural gas work, too? i know you like the volt but wouldn't natural gas work? >> the problem with natural gas is it's too limited in range. fred has some things going which for heavy over-the-road trucks, class 8s, they'll be seeing range of about 500 plus miles. but for passenger cars, compressed natural gas simply doesn't provide the range. what is going to provide the range, however, is light duty pickups and medium duty pickups with a battery pack and with a
secondary engine very much the same concept as the chevrolet volt, which will get about 100 miles per gallon. >> this is dave walker. i want to compliment you on having a plan, something the government doesn't have, that recognizes we need a transition strategy, that also includes conservation. i think you raise a critically important point. when you recognize the fact that the united states spends as much as the next 15 nations combined on defense, one of the reasons we do that is because we're vulnerable to certain parts of the world where we're unduly dependent on energy supplies. i think you understand that this is not just an economic issue, it's a national security issue answered complime and i compliment you on your work. >> i don't know. santelli had this thing where the tanks were big but you could go back and forth between gas
and natural gas if you needed to. >> fred, i don't understand why congress again hasn't picked up on plans like this before. boone pickens has talked about what you've talked about with the truck conversion and he's been talking about it since 2008 and it hasn't gotten passed yet. why isn't this something you can get both sides of congress behind? >> i think bob summed it up very well. it tends to be jaw boned as a conservative resistance against subsidies, let's say for natural gas heavy vehicles or electrification of light duty vehicles when in essence it's the government trying to transition us into those technology as opposed to spending so much on the military budget, much less having two shooting wars over the last ten years that have cost us 5,000 young men and women. >> fred, it also i think there's a perception that hydrocarbons with this administration, that we didn't want to add
hydrocarbon infrastructure. look at keystone, they're going west. the conservatives have an ax to grind with this administration and even to electrify the grid, it's going to take hydrocarbons to eelectify the grid. if you have someone not interested in building out any more infrastructure because of a carbon footprint, that's where the frustration comes from. i'm sure you guys are somewhat sympathetic to that frustration. >> we are all for drill, baby, drill and the vision of the united states potentially becoming self-sufficient in petroleum and gas production. it a dream that we fully support. however, being energy self-sufficient in the united states in petroleum is not going to insulate us from world energy prices. it will merely -- it will merely reduce the degree of american vulnerability. and finding alternatives to fossil fuels is still highly justified from a standpoint of
national security and economic benefit because ultimately if we can get a large part of the transportation fleet on electricity or other sound alternatives, it is the most efficient transportation solution and saves money and makes our economy stronger. >> hey, fred, this is a surprise. my daughter was looking for the weekend wall street journal and we're going to have to make a trip down to washington, d.c., to the smithsonian, it was such a great passion of hers and down at the smithsonian, there's 130 winning images out of 20,000 submitted for the windland smith rice awards. there is wendy. i just wanted to mention that. we're looking forward to it and i would urge anyone interested in getting involved, fred, for your late daughter. >> thank you. you'll enjoy it.
>> yeah. and there are 130 -- you saw some of these, right, becky? >> they are great pictures. >> did you know that was going to be in there, fred? >> i did not know it. no, i did not. >> it was on the weekend wall street journal. well, thank you, gentlemen. i appreciate it. coming up, stocks to start your trading with. "squawk box" coming right back. [ tires squeal, engine revs ] ♪
welcome back to "squawk box." so we were just talking about fred smith daughter's wendy. i want to tweet that at the smithsonian it's every year annual awards for nature photography. >> and followers, thousands, will be able to -- >> melissa and jim are -- cramer, will you retweet me or something? >> i did it immediately. as soon as i saw you. >> you will do it for me? >> jim's got like a million followers. >> he said he already did it. >> okay.
okay. thank you. so i was surprised at what finally happened on friday with jpmorgan and wells. was that the right response? i'm not sure, people looked at it for a while and said, wow, it's going to be tough in the future? >> cramer? >> i read the piece in the new york times on saturday. i felt the quarters were pretty good. i took the well fargo quarter home. it book me about an hour and and half to read because it's really hard. the people who comment on it did not realize what a great quarter it was. >> or can we say that u.s. banks were really being taken from the european banks, sold off pretty hard going into the european close and that remained a cloud on the session for the rest of the day. >> jim, there was a lot of discussions about expenses and
citi did a great job of handling expenses. >> 12% loan growth -- now, i know, i understand. i was going to say that's a joke. it's a joke until it isn't a joke. one day they will say we've got to own it. i am bullish on these banks. the european banks are in control right now. if that ever were to lift, people would follow. >> follow me, absolutely. >> can i call you godfather? i want to follow you. >> thank you guys. >> we'll see you in a few minutes. be right back after a quick break. [ female announcer ] it's time for the annual shareholders meeting.