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tv   Squawk on the Street  CNBC  April 20, 2012 9:00am-12:00pm EDT

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months should look good. >> maybe it will combine. >> the big capital expenditures haven't come back. >> thank you for being here. it has been a tremendous two hours. a quick programming note. the move ree "unravelled" is going to be airing on cnbc later this year. be sure to join us on monday. "squawk on the street" starts right now. good friday morning. welcome to "squawk on the street." i'm carl gint knee yeah. joined by jim cramer. german business sentiment higher for a six consecutive month. things are going to get interesting in france. we'll start the road map with
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general electric beats with industrial businesses. how is ge capital's comeback? we will break it down. >> mcdonald's, meanwhile, defies europe. it has priced in -- >> oh, come on. >> microsoft with strong windows revenue. but sandisk, ouch. things may not improve in the second half. >> and we have big one-day pops as well. are those early valuations jumping the shark? we're going to travel to cramer and get some answers. >> first, mcdonald's reporting first quarter earnings. same-store sales boosted in part by new menu items. sales were the big stand-ups. a lot of concerns from notes yesterday saying europe is going to be a problem. some of the remodeling is beginning to wear off.
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>> no. >> didn't happen. >> i want to point out, carl, let's contrast yum, which is kentucky fried chicken. everyone thought yum would shoot the lights out. we had to downgrade mcdonald's saying they were not going to outperform. they outperformed. that's how things work in this business. people at home both deliver good but one was prepped and one was unexpected and that's why you get this price change. >> still, we're not seeing the 8, 9% figures that we saw a few quarters ago. do you think it is a proxy for slowing growth? >> no. look, i think that mcdonald's is a menu invention and technology. people don't think of it like that but they've consistently brought costs down and reinvent a menu. it was the best performing stock in the dow last year. so we have a lot of worst
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performing stocks like bank of america playing checkup. >> so you wouldn't expect it to go back up to 100? >> i think it can. cautious on the future. but i want to point out the following. which is, this is a company like home depot, which i think is incredibly shareholder friendly. the only reason that i'd be concerned is i don't like to buy the first year of a new ceo. the new ceo has been groomed for many years so maybe it's okay. but this is something i worry about because skinner was a remarkable man. >> want to move it along as well. general electric lost 49%, our parent company, i should point out, one cent ahead of estimates. that also beat consensus. i've been on the call, or was -- >> just reading the reports. >> and cfo as well, a couple of interesting things to note. the quarter was fine, it seems.
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they speaked relatively positively. as you might imagine, europe was one of the first questions. what do you see in health care? listen, we plan on a tough year for health care. it's coming in as we thought. we're not unhappy with what we're seeing there. a lot of questions, as you might expect, about margins over the course of the year which they have been pointing towards and continue to point towards saying the euro is progressing as we thought with the organic growth, with the margin improvement that they hoped for and they are going to start divvying money, paying money from ge capital to the parent, which hasn't happened in a long time. for the first time since '08, real estate was positive. >> if you go down the hundreds of pages, whether it be the uk or -- mike who run capital, boy, he came in and said, this is it.
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we're done hurting this company. and they are done hurting this company. and i will also point out that ge is an infrastructure company. 20% order growth. when i hear 20%, i say, they are back and you cannot stop a company with 20% growth. >> record industrial orders. profit margins and industrials down a little bit. their argument would be wait for more cost cutting measures to take effect. >> right. and one of the things that has happened here with ge, it's happened rather remark clee and quickly. look at this turbine growth in china. look at the company's locomotive growth. to me, one of the continualing themes is better than expected growth, ge has. >> what we also listen on these calls for, just getting a sense
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as to what is going on here in the u.s. the big debate for investors that i speak to, u.s., is it better than we think it is, better than how it feels and what about europe? immelt continues to say things are fine, they are getting better. not off the charts but good. and that seems to square with what i heard from james gorman or jamie dimon last night on his call. it's interesting, jim, when we look at concerns about the u.s. economy and then concerns about europe and where things may fall. >> you guys always talk about confidence coming back among american business. is this it? it's in the framework of volatility that we know will continue? immelt has already called this the new normal in his letter. >> people are gun-shy. i saw the 2008 real estate comments, you be careful what you wish for because real estate -- i immediately say, wait a second. don't ever be really bullish. you get your head blown off when
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you're really bullish. but some of the facts can't be constrained. the facts are remarkable for a lot of our companies. the growth rates are remarkable. it's very difficult to not be more excited. >> i think it's an interesting point that carl raises. it is, in a way, what we can expect in terms of confidence. mark from citigroup was on and talked about the lack of confidence and the mystery of it all. why are ceos not willing to do deals. why is there a lack of robust confidence? they don't want to go there. they want to say everything is fine, getting better, but no one wants to say it's absolutely great. >> because you look like a bozo if things slow down. what is the story in the "new york times"? economy could be forward. immelt is saying, those stories are wrong. this is the new york times and
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wall street journal. neither one of them is necessarily known to be able to make a case that things are bad. wall street journal certainly. and yet how do you buck the media, david, which is almost uniformly saying, don't believe the propaganda that things are good? >> i don't know how you do. i also think fixed memories are not as short as we think. we could have had the same conversation a year ago, exactly, whether it's about ipos, capital markets, and everything being be fairly good. europe was starting to bubble up in a good way. here we are, continuing to be a key concern whether or not it is really going to have an impact on the u.s. economy, some believe it will or not or on our financial system. it's there and tempers so much of this. >> i want to ask you later about downside volume and whether or not people are anticipating a summer of pain, right? >> things have been so negative, it's incredible. to cut to this question about
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optimism, who was the most optimistic last year? natural gas executives. who was maybe the most optimistic executive in the country that i interviewed? >> aubrey. >> aubrey. >> a fascinating story. you think natural gas perhaps is -- it hit a new low yesterday. >> it's not going down. we're burning off more natural gas than we are using. natural gas flaring is something that you get in trouble with the government. it's these contracts. carl, if you were to have sold your rights in pennsylvania so a gas company, they are not allowed to drill. they should be shutting in but they can't. >> let's switch gears quickly. profits topped the street driven by strong demand for server, pc
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sales, also holding up better than expected. we're focused on the expected release of windows 8, working on a tablet friendly -- >> the enterprise is still microsoft and the enterprise for microsoft this quarter was off the charts. the pc was better than expected. good quarter. >> worries about making this quarter if you had to choose between apple and microsoft right now? >> they both sell at 11 to 10 times earnings. >> this isn't a real anomaly.
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if apple were to stock by 10, why should i buy a $30 stock? i'll buy the $60 stock. it's this darn price tag. yesterday when we were watching the monster coming out, hey, don't believe what you hear, it's entirely verizon wishes it could sell other phones and one of the things and i love the commercial but the doings won't eat it. i mean, yeah, verizon can say all we want. >> it doesn't matter what we do. if the dogs won't eat it, these
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aren't dogs, these are viewers and they say, will you give me a break? they are dogs. that's kind of like mad men. right? >> oh, yes. >> the customers are dogs. >> kind of mow hawk airlines. >> i would have let him have it. >> for a tv character sometimes ring the bell and nobody dies, nobody is killed. got to be. >> it was a pretty good quarter. back to our overall economy,
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people were not expecting a significant revenue jump. >> how many times have we heard this quarter and she said, jim has been talking about earnings that are better. things are bad. we have all of these things, things are bad. are you on the darn calls like -- listen to chipolte. do you want to -- >> >> it's a long season. >> it's a long season. >> it's unbelievable. >> can we transition? >> let's do this question. microsoft brings us to the squawk on the tweet today and the spirit of the s.a.t. exam,
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get out your pencils and complete the following sentence, in the meantime, sandisk took a beating in the premarket. seven analysts have downgraded current pricing pressure is there something special about this story. >> hey, maybe the munster will come out. i'm something like that. sandisk, not a great company. the analysts keep -- they loved flash so much, they should have
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liked disk drives. but, no, they like flash because they think they are so smart. >> all right. >> i can do slag, too. >> i was just wondering what the munster theme is. >> that was herman munster. >> there it is. of course. ♪ >> wasn't he somebody's cousin that -- >> he was a judge in "my cousin vinnie." >> classical actor. >> he was underrated. i.p. mania heating up a day after splunk, up more than 100%. two more companies taking the
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plunge, infoblox and midstates petroleum. >> infoblox, this is a big data play. that's what people want more than anything. going up. big data, big data, big stock. >> priced above the range, average after market was up 30%. talked to a couple bankers. capital markets are great. that's what they will tell you. it's not just ipos, by the way. it's follow-ons. >> btg did a deal. the ceo is getting indicted for insider trading. >> you know, it --
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>> that gives me pause. maybe i'm concerned. >> groupon was part of the coh that doesn't make a lot of money. the biforcation in this market, what i'm willing to pay for it in the ipo versus the after market is night and day. >> particularly because they are issuing so few shares. guide-wise, they did it fairly well. they took a hit and was 5, 7% down and got out early. they did a managed secondary but important to keep in mind. >> control the float. >> what's that? >> control the flute. coming up, the apple bear and why he is now sharpening his claws. futures still looking positive
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executives are saying it may no longer be cheaper to do exchange in china. >> i have not heard this from any executive on the show.
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you say our costs are cheaper than making things in china? >> oh, yes. in china, natural gas costs and energy in general, more than three times that cost. natural gas is over $6. the cost advantage in many intensive industries is diminishing and i think now the u.s. is going to be a much more competitive on the global scene in terms of manufacturing costs. >> amazing. >> can you say repatriation? >> reshoring. we have a survey saying 48% of the larger companies in the united states he is basically saying, as great as china may be they are way too high. it's not enough water in china. the resources, 10% wage increase in china. i would rather make it here. >> right. their wages are going to be better than the energy costs important. ge reporting this morning
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moving -- they are going to start making appliances back in the united states again. it's a huge move for ge moving those jobs back to the u.s. >> i don't think people understand that raw costs, whether it be for kimberly-clark really beautiful number or for any chemical company, your gross margins are going to explode higher. sher win williams, because you are using it as a beat stock. >> and you heard it hear first. when we come back, cramer's mad dash. one more look at futures before
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you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz. what a crowd we have for the mad dash 4 1/2 minutes before the opening bell. taking a look at chipolte and what they said last night. >> i love a company with 12% growth, with sustainability, a company that says the flour tortilla is going to be better for you than ever.
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but their new concept, in london -- it's run up a lot. contrast that with mcdonald's. people are saying, wait a second. i've got to take profits. do i blame anyone? no. but this stock is left to stay this is a company that has got -- can i talk about costco for a second? there are only two companies that i know that talk about how the costs are lower because we keep our employees. isn't that one of the reasons why people love costco? >> average wage, $20 an hour. $20. >> well, that's what chipolte -- they want to be costco, carl. i can't wait to see your documentary. a lot more to come. the opening bell on this friday morning in just a moment. sadly, no.
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real. if you're down here, you know the feeling. the opening bell happening in 15 seconds. a picture of the s&p 500. at the big board this morning, infoblox. and some cheers for that. network automation celebrating the ipo. we'll talk to the companyompany also celebrating the ipo. jim, you have not seen the ipo this strong in how long? >> going back to 2000, 1999. they have servicing cloud. those are growth businesses. when you see security service, you want to own it. when you see cloud, you want to pay up for it. >> infoblox -- >> it's the way you massage data. we know massaging data is
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something that millenia talked about. these are the sweet spots in america. infoblox combines hardware and software in appliances that sell automated computer. you know what this says? >> hot deal. >> this says, i am a hot deal. sizzling. >> watch your fingers. >> at the same time, midstates petroleum. >> that is like energy 21. they take very old fields that have been left for dead. like exxon left a lot of fields for dead. and they use technology to discover new oil and that's a winning formula. but it is in the end a hostage to the price of rent. >> right. what strikes me, your overall theme for the past couple of months has been don't do the macro, do the micro. >> yes. >> and the ipo stories are real. it crystallizes those arguments,
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doesn't it? >> yes. it's a plain indianapolis team. that is a dominant internet play. these are resurgent american industries. we're taking them back no one else has this story. i wish they would recognize what is going on we are taking back manufacturing. it couldn't be a worse company. this is a great country. >> and not only that, gas companies we should at least mention. back to 388. a one-month low. >> i thought it was supposed to be $5. i thought we were going to have to start making things at home again.
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>> let's talk about under armor, revenue beats, they tightened their fiscal owe 12 margins. >> we have found this quarter. if you run big in advance you get sold off. allied, yum, now you think i'm going to overuse this term. this is an innovation technology company. they have new kinds of clothes that people like. not unlike lululemon. chipolte is trying to figure out. >> when you tell me that mcdonald's is a technology company, my ears perk up. >> well, listen, they have been able to bring down the costs. long past the days when you used to get that fry basket.
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>> that hurt. >> you sound like you speak from experience. >> well, karen cramer has that. >> how about slumber jay? >> schlumberger, that's a company that has business saying, listen, don't worry about natural gas. it's back. >> let's take a quick look at our screen. american airlines union reaching an agreement with u.s. airways on a potential takeover. i know you have zero to little interest in airlines overall. >> the first stock i bought for my dad at goldman stacks was american airlines, it went from 60 to 30. it taught me a valuable lesson. don't be an i hdiot.
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>> i assume if this consolidation happens is net positive for the industry? >> well, you know what. i'm trying to go to boston, every flight is full. they have big oil problems. ceo of alcoa saying that they have to cut the weight of planes because the fuel cost is too high. i will never recommend an airline stock on this show because in the end i care about our viewers. >> well put. we'll keep an eye on that story as it develops today. bob and david are on the floor. happy friday. >> good morning again, carl. of course, we are in front of infoblox. >> 12 to 14 was the initial price. now, look, 21 to 23 and another company with a small float. obviously a very hot space. i want to emphasize this generic idea. we saw this with annie's, with tumi. price a small amount of shares. this is probably a third to half shares in the first few minutes
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out there. of course, you turn it over many times a day. >> make sure you know how much stock is coming behind it. >> exactly. now, my point about today, another strong day for earnings here, we're tracking -- i tracked seven big companies today. nine. excuse me. nobody missed. so what's happening is, the numbers are that are going up for the s&p, we're at the beginning of the quarter. remember when we started out a week or so ago, guess where we're at right now. 4.4% on the s&p 500. that's the earnings growth for the s&p 500. now r now, i'm not saying that it's titanic. bank of america yesterday really helped push the number up. they had a very good number. today we have a bunch of companies doing very well. i like companies today because a lot of them, people aren't realizing what they do. for example, johnson controls,
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these guys make the heating and ventilation. they are very big in europe, for example, they are very big in car interior systems. what they got from them, weakness in europe, surprising there. they were up 7%s that a good sign for them overall. that's a good sign. ingersoll-rand, same thing. heating and air conditioning, tools and pumps, their beat was nice and they are being very, very cautious i would say that's the only slight disappointment. aerospace, environmental controls solid, double digit
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growth margins in aviation they compete to a certain extent with honeywell. >> i want to mention the imf meeting going on. christine lagard is saying, i want money and she wants pledges this weekend for $400 billion and here is what is interesting, they want influence. so we don't know how much they are going to contribute. but it may come from the merging market guys and in exchange for
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that, they want 24 executive board members. they are weighted towards the u.s. and china. >> sure. >> they want more seats and influence they say, we want in. >> all right. bob, thank you. back to you guys on the set. >> cloud, server, security, mobile. these are the things that people want, carl. they just want. all right. let's shift the bond and the dollar. rick, take it over. >> very good. jim, thanks. if you look at a one-week chart of our ten-year, they are virtually unchanged. if you look at it hovering just below 175, it's virtually unchanged on the week. but look at the chart of the dow jones industrial average and it's updated as it is open nine minutes ago. it's up to close to 200 on the
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week. maybe have been surprised, why are interest rates higher? i would say europe. there's a great story today and back door european rescues. it talks about how the claims are really starting to add up and the injury mans, banks in particular are going to end up with a lot of bills and more risk than currently being advertised. that's probably the dynamic we're going to continue to concentrate on much to the chagrin of u.s. investors, which obviously sees some pretty good earnings but there's a whole lot more to the economy, especially the global economy, than the settlement of the dow, s&p, or the nasdaq. jim being back to you. >> rick is right but we haven't focused overseas. it's nice for a change. >> that's true. >> let's check out the latest news in energy. courtney, you're doing a great job, what is going on? >> right now we're seeing crude trade up higher. traders down here tell me it's a short recovering rally.
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the weaker dollar is rallying out of germany. we're going to pay attention to what happens overseas this weekend to see if we can get any more movement in crude. right now, we're probably not going to move too much higher unless we break through 104.50, slightly higher to 105. until that point happens, we break below gasoline futures moving ahead. doesn't look like we're going to see $5 at the pump. at least like we thought a couple weeks ago. >> courtney reagan, thanks. you are a fan of production and -- >> look, one of the things that we've been finding over and over again, get a day when brent goes up, people want to. there are technology forces at work here, to be able to take a
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field that's been left for dead and find a lot of oil in it. tom ward, he's been buying in the gulf. energy 21. these are left for dead stories. can i point out, if we want the biggest one, it's going to be oxidental. >> how did that go? >> 22.78. >> well, okay. was up yesterday. recei red hat hitting a high. they are working. how do you get stock in those deals? i mean, people at home are saying, you know what, i tried to get 200 shares and they told me, sorry, pal. >> and they don't want any flipping if they can avoid it. they are looking for notes for people who attend the meeting so the underwriter can write about
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what you're thinking. >> the next polygraph test? >> send me the notes from your meeting. >> they got the notes in. >> you're allowed to -- what a great movie. >> amazing. >> bob pisani, 22 and change, a far cry from 12 to 14. >> here's the important thing. here are guys from infoblox, it's part of what makes america great. they all work with the company. they will be talking with the ceo in a little bit of time. 1.1 million shares. 7.5 million in the offer. right at the open they did 1.1. probably traded two million now already. 7.5 million is out there. and literally they have traded two million.
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the small float in addition is trading at $22.62. we'll get more information for you in just a minute. i think it's north of $2 million on the trade. guys? >> geez. >> thank you so much, bob pisani, we'll keep a close eye on that. microsoft up more than 4%. the best performing dow component. a 32.30. >> remember the days when that used to happen. intel is probably cheap off of this. let me just say that. i disagree. midstates. >> not so much larger ipo. you're talking there it is. $200 million in sales last year.
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and going back in with modern technology and saying, hey -- >> that's why we have technology. nobody wants to talk about it again. the president, romney's involved with -- he's not even natural gas there is still a disconnect, david, if that company had been private and then public three months ago, it would be a 10, not 13. we'll keep an eye on that. the ceo of infoblox when we come
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back. supporters of infoblox and the ceo is joining us here.
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>> this guy is 24. isn't that how you estimate money? >> no, i've just been on the run for two weeks. >> there you go. >> you definitely brought some back up. >> we did. >> i've never interviewed 50 people at one time. you said be nice to you or we're in big trouble. >> that's right. we heard that you can be brutal so the enforcers are here. we get business when networks get overloaded and start to crash because everyone is adding everything to the network. ipads, iphones, it makes it more complex. it's perfect for us. >> a diverse group of clients.
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they don't have a lot of common. >> they do. they have a computer network. anyone that has a computer network attaches a lot of stuff to it, attaches problems to it and we fix the problems. >> i'm just going to throw -- and i tried to do this with yelp, too. i listen to cell phones and smartphones and we got excited and ended up thinking, maybe, we got too excited. make them money. >> generating a lot of cash making nongap money. it's a good business. >> but gap money also matters. will you be profitable in 2012? >> not in --
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>> on a gap basis? >> we're a market that needs that product drastically. expiring in six months, perhaps you, other employees, and your venture investors trying to sell some of the shares in what is a small issue today. what is going to happen in six months? >> well, the luck will come up, of course, but we have a great long-term future. we have a business that is at the beginning of its growth cycle. >> why is your business at the beginning of the growth cycle? >> because networks are getting more complex. four years ago there wasn't an iphone. there wasn't an ipad.
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now everyone is sticking that on the network and apple has got to sell a lot more. we're just at the beginning of the complex stage. >> and you need the trinity, i think it make a lot of sense to buy it at the right place. >> before we go, you've worked for companies acquired by names people know like june per. >> yep. >> >> we sell to june per. >> think they are turn r turning it into a business that we've never had. the investors on the day got a great return. so that's a good outcome. >> robert thomas of infoblox, thanks for stopping by. >> thank you. >> thank you so much. >> thank you for having me. >> midstates petroleum, our interview with that ceo in a
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little bit. a lot more "squawk on the street" is straight ahead. >> announcer: still to come -- ♪ >> announcer: the number 6 is special to cramer, too. six stocks in 60 seconds is on his mind and ours. all that and more when we return. een listening to the numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
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6 in 60 for a friday. six stocks in 60 seconds. we'll start with river bed. >> this gets too fired up and goes down. be careful. >> hp taking off a short-term sell list. >> after microsoft last night, things are getting better. i'd get this. i don't want on it, though. >> sirrus logic. >> apple is going down. cirrus makes the sound boards. people are getting worried. >> advanced microdevices. >> give me a break. >> bank of america, downgrades. >> there is not a lot of revenue growth. >> and finally, honeywell?
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>> i have one of the favorite ceo. he's a good neighbor and a good ceo. >> let's talk about margin improvement. >> aerospace, aerospace. aerospace is the hottest business. >> have a great weekend. >> absolutely, partner. >> we'll see you next week. when we come back, the only analyst on the street with a sell on apple. going to defend his call on the stock. mcdonald's after the earnings. still a good buy as jim skinner says good-bye [ male announcer ] we imagined a vehicle that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today.
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welcome back to "squawk on the street." another big day of earnings for the bigwigs on wall street. we're going to breakdown the numbers from the golden arches. >> apple on the verge of a breakup? the shares slide over 3% in the
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last week alone. we're talking to the one man who is sticking with his strong sell rating. plus, ipo mania, company seeing strong gains in the public debut. are they back from the brink for good? >> also, ahead, david is lowering speculation that his company will make a bid for pinterest, calling it extraordinary in helping google. >> on to the banks, the consumer protection bureau is investigating nine leading banks over their overdraft protection programs and the justification for the size of their charges. jpmorgan, wells fargo, and bank of america is being looked at. the first presidential elections for france are on
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sunday. to tilt away from austerity and more efforts on growth. this is going to be talking about a cliff hanger all around the world. people are going to be paying attention to paris. >> it's a potential huge negative and potentially you could buy and they have fallen very severely over the last month and they think could be outperformed by 17% moving forward. >> if sarkozy wins -- >> just generally, they've looked at the banks and the rest of the market and they believe it's a golden opportunity. >> but if france has a new leader -- >> yep. >> -- presumably he is going to win, what is that going to do? we think of merkel and sarkozy. >> the first issue is what it
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means -- >> or the eu. >> the first issue is what it means internally for france and it's solvency and sovereignty. it's a three-month high though it's not accelerated. names from goldman sachs to microsoft and honeywell all reporting the first-quarter results and beating the street's estimates. we want to take a look at what you might call the bigwigs since the start of the broad rally. goldman sachs shares surging over 25% year to date. big blue powering ahead with 9%
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so far this year and honeywell standing tall with a rally of over 7%. or maybe 10.5%. jim cramer is going to talk to the ceo and chairman of honeywell. you should note that's actually an underperformance for the market overall. they have done well. >> yes, we have. that's true. 7%. we should also point out goldman sachs, while it's still up sharply, it has been down almost every day since the company reported earnings in contrast to the other financials which have had mixed financials to good performance. >> and a lot of buzz with gorman and morgan stanley. those two banks are playing against each other mcdonald's
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and golden arches kicking off the conference call. shares are trading higher jumping off the call for us, senior restaurant analyst at ubs has a buy on mcdonald's david, always good to talk to you. >> good morning, carl. >> it's been sad this morning that some of the key information is not necessarily in the release but potentially on the call. what are you hearing? >> well, i think that the quality in this earnings was good. the major take away and the big upside was really europe. there was a lot of concern around europe that it was going to be flowing. yum brands mentioned that it was floating on their call yesterday which heightened mcdonald's during their february sales underscored that europe was becoming more of a struggle but the good news was that the
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global same-store sales, excluding the calendar effect in the march month and said that that continued into april. so good numbers. >> so we think -- your expectation is that april is tracking above expectations? >> well, april is tracking -- you know, they said around 4% was what they said. when you consider the calendar effect and there are adjustments that have to be made if you have an extra weekend day or whatever. but excluding those effect, the april momentum is exactly the same as march which is better than what was a worry some february. >> david, this question of what is happening in europe is absolutely key for the big american multinationals. as you alluded to the sales growth at mcdonald's is 5%, that's what they've come through with. given a very severe winter in addition to the economic problems, clearly that is a good result. are they super human or is europe not as bad as others
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would have us believe. >> they softened in france and germany and that didn't seem to hold back mcdonald's and their asset base is in fantastic shape. they've re-imaged about through quarters of their restaurants over there which makes them a fast casual like brand positioning and they have the ability to and they have their basis covered for any economic environment and the booming so to speak has begun to fade. is that true? >> that's interesting because that wouldn't be this year.
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they are moving from 70 to maybe 85% or so re-imaging europe. so they are keeping the pedal to the metal on that. going forward you have to wonder whether there might be an eroding lift from that or conversely will their brand positioning be so solidified versus the competition that there may be a dying off whatever competition is out there for kbreers to come. >> david, jim skinner is leaving as ceo. he's doubled the value of mcdonald's shares over the past five years alone. >> well, don thompson is a fantastic executive. he's got a lot of fire in him. really a big fan of him. and he's done a great job and
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he's number two and there's a lot of international speexperie. so don brings with himself a ceo that has experience overseas. i really like those two guys as a one-two punch in terms of their operating credentials and the commitment to execution for those guys. it's fantastic. >> stocks ticking up on some of your comments. david, i appreciate your time and get back to the call today. >> thank you. >> david palmer. let's check the two big ipos this morning, midstates petroleum and infoblox. >> you're right. they expected to share at a smaller price initially. they brought that down. but it's performing well in the so-called aftermarket. >> it's actually natural gas and this is a bad time to come to
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market if natural gas is one of your main assets. but we'll talk to the ceo in about ten minutes from the show. >> microsoft beating on both the top, beating the revenue line and the earnings line. sending shares, as you've seen them, almost up 5%. a chat is surrounding the microsoft hits a fever pitch. simon is talking about it. i can't stop him. is the name on the verge of a major game changer? we're going to sort through rumors and fact right after this break. [ male announcer ] while others are content to imitate, we'll continue to innovate. the lexus rx. why settle for a copy when you can own the original? see your lexus dealer. i look at her, and i just want to give her everything.
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tom petty. we want to touch on the microsoft chatter. how much is the tech in facebook worth. it's a lot more than what they paid for it, isn't it? >> that's right. back in 2007 people miami did what they thought was crazy. he invested $270 million of microsoft's money into facebook and got only 1.6% of the company in return. that meant a $15 billion valuation for facebook.
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the performance is just getting back to even. the $15 billion valuation is not so crazy anymore. facebook is expected to go public next month with a $100 billion valuation. that makes the stake between 1.5 and $2 billion, assuming it hasn't sold any and the company hasn't indicated that it has. microsoft has done more than invest in facebook. it also its bing search engine. what is microsoft likely to do with its stake? i guess it could cash it out but then again that $2 billion, even if it is $2 billion, is just about 2.5 to actually a third or a half of what microsoft generates from operations in a given quarter. the partnership is worth much more to microsoft at this point than any cash they would probably get. >> interesting, though. a great investment but, yeah, your point is a good one. still not really dollar-wise
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given how big microsoft is. jon fortt, thank you. let's look at where we are trading on the apple stock. there is a price action that we have on apple over the last couple of days. no, sir necessarily the quite heavy losses. people are questioning whether it's the automaticed trade kicking in or whether it's perhaps more negative that might be happening with the stock. certainly there is a lot of news flow for apple shareholders to get through over the next couple of weeks. let's bring in edward from aci research. he's one of the very few, if not the only person, who has a sell recommendation on apple at the moment. is that correct? >> yes, that's correct. how are you? >> i'm very good. the target that you have is $270. what a lot of people will be focused on is that in two-weeks time, the galaxy 3, the great
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hope for this year will be in conjunction with the olympic games and will allow athletes to have contact with payment through the 2012 game. how much of a threat is that, do you think, for shareholders in apple at the moment? >> that's really the number one threat for apple shareholders. the launch is planned for may 3rd. they moved it up because they felt the need to really take on microsoft. the new lumia phone and of course they wanted to beat the iphone 5 america. so it's very important and the only reason it would matter is because samsung is the top commodity producer of cell phones. they are the most vertically integrated and in a more competiti competitive market, the cost of production is everything. and they are the only company who has the same purchasing power as apple does.
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so this is the flagship competitor. >> is this the competitor that you would expect in consumer electronics? and your call for apple at 270 is absolutely die. you would have to have a lot more than that come along surely. >> absolutely. so first of all, the news flow is weakening a little. you had an incredible launch quarter. it happened to be a seasonally strong quarter. now things are coming back as you would expect, they are coming back down again. samsung surging forward in q1. they sold 40 million plus smartphones and so that puts them back in the lead over apple. as far as the $270 target goes, you would have to have significant margin erosion on the iphone to have that happen.
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we haven't seen that yet. we have seen a $30 per unit increase on the cost of the new ipad versus the ipad 2 and that's a ding at margins and could take it down to ten times the consensus, which is right now $460. you're starting to see price based on microsoft not too long after launch, of course, very well discussed topic with the rebate they are down to zero dollars and i think they have to. i think they are coming in below the market leaders. so you're going to see that but you won't see what will bring apple down. >> we have the prospect of apple tv launching by the end of the year. many people will be very excited that this takes apple and
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presumably given what they have done elsewhere, they have a revolution in that product cycle that could take them into a whole different orbit potentially, no? >> i don't believe that that's so because if you look at what microsoft is doing to remain relevant, web apps, their whole angle at relevance and this is not a call on microsoft. it's really to explain that microsoft and the carriers are working together because the carriers want a more open ecosystem and they -- that's what web apps will do for them. they want to get -- obviously they want to get apple's prices, the prices that the iphone -- they want to get them down. otherwise, there's no way microsoft would get the support that they are getting for at&t and soon to be remembon par wit year's specks, not this year's specks. it's pretty clear.
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>> i'm sorry. i didn't mean to cut you off. >> it's okay. >> just for the sake of completeness, do you own apple stock? do you -- do you have business relationships with samsung for a sense of disclosure here? >> no, we have no relationships with any company cans in the industry and our coverage area. we only get compensated by institutional investors and we have no short or long positions in any company in the industry right now. >> it's a brave call. thank you very much. have a great weekend. >> you, too. take care. all right. i want to bring in phil lebeau right now on the news line. he has the latest news out of amr involving the unions and u.s. air wears airways. >> we have news confirming what we first reported yesterday afternoon that u.s. airways has reached an agreement with the largest union from american airlines that essentially
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guarantees their support and their outline for a bargaining agreement would look like if there was a merger between u.s. airways and american airlines. this does not mean that they reached a formal agreement in terms of what a contract would be but it shows that you have the unions now saying that we would throw our support behind a merger of u.s. airways and american airlines as opposed to trying to get a deal worked out strictly with american airlines in beang republicankruptcy. if this is the battle with ceo putting out a statement to employees today saying, listen, we think that u.s. airways and american combined would be the p preeminent airline in the world. >> well, it's not insignificant to have the right to reorganize but parker has been very aggressive in trying to pursue this, hasn't he?
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>> absolutely. and keep in mind, there's a lot of posturing as you well know when you're talking about bankruptcy court. they can go back and say we had a deal in place with u.s. airways. you better change the term of the contract. that hearing for the contract starts on monday. >> interesting. potentially a lot of the cost savings there. i know people who are looking closely at llc in the event that they are successful. phil lebeau, thank you. as we go to break, take a look at shares at the big board. we'll talk to the company on the day of the big debut which the stock is up 72 cents to 1372 in just a moment. it was a town that people didn't really pay too much attention to honestly. i came to yountville really because of the french laundry. this is the place i had been looking for all my career. so i decided to plant a bay laurel seedling to commemorate that. as a chef we are always committed to our suppliers...
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hey, "secret" sauce. geico®. fifteen minutes could save you fifteen percent or more on car insurance. all right. welcome back. we have john crumb with us. this was the largest ipo of the day. to use a word that simon might use, welcome. thanks for being with us. i want to start off with oil and gas, louisiana area taking fields that were once, i guess,
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dormant. how much of your production is based on natural gas versus oil? >> we have a little bit of an advantage in this market today. >> and what about the natural gas component? are you concerned -- what do you do in those fields where you're obligated to drill even though there seems to be a surplus of natural gas at this point with prices that cannot be profitable? >> that's exactly right. natural gas is a tough business today. our natural gas is only associated natural gas associated with the oil production. we actually have no gas wells. we get about 10% of our revenues from natural gas. >> well, we are excited about going public. we have been growing at 100% per year for some four years now.
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we see no reason to slow that growth. >> why are you going public? >> because we need access to funds to grow our company substantially. it will be increasing our spending and finding different opportunities to go forward. >> although a lot of the proceeds from the offering are not being used to help capital ex be speto repay debt. >> whap kind of growth are you anticipating over the next year in terms of your ability to produce? >> we're modeling at 50% growth over the next 3 to 4 years and we think that we can achieve that. >> you only have 71 employees. it seems rather small for a company that has a billion dollar market value. >> yeah, i guess that's the exciting point, too. one of the reasons why you should invest in a company like ours, we don't take as many people to get these things done. we're going to be over 100 employees by the end of this year. >> when you say we don't take many employees to get these things done, what are you talking about?
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>> to drill our wells. our people are very productive and capable of generating a lot of opportunities with a fairly small workforce. >> do you anticipate any new finds? >> at this time we're focused in this region. we think we have plenty of skill set and the kind of people to take us about anywhere. >> all right. thanks for being with us. appreciate it. >> congratulations, john crumb, president of midstates petroleum. it's debut today. >> financials is clearly a big focus today as many came through with the quarterly results. but as the big banks bring in their debts, is this sector mutating into something else? we'll talk banks, regulatory environment and a lot more after the break on "squawk on the street" heading into a great weekend. [ 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.
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it's 10:31 on the east coast, 7:31 in the west. ipos, infoblox trading up 40%.
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kimberly-clark posting better than expected numbers. and b of a is the biggest decliner in the dow falling by 1%. you don't see 5% moves very often. >> no, not very often. in fact i can remember a handful of times when they increased the dividend or had an actual payout. but you're right. it's a rare move. >> i wonder if it's in response to what was being said on the conference call. we should check back be. >> the stock has been up from the get-go as a result of better than expected numbers. >> for sure. >> another ipo has opened at the nasdaq. proof point. pfpt. it's security as a ever is, cloud play. it actually was marketed in a range of $10 to 12, priced at 13. again, you see this huge jump at the open which is really where we are with the ipos at the moment.
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there is something going wrong that you see these huge jumps. you're shaking your head. >> no, i don't know that something is going wrong. there is always a question as to whether you left money on the table when you see these kind of significant moves up as a selling shareholder, whether it's the company selling or other selling shareholders. but it's a very healthy market and one wonders as we sit here many danes talking about all the ipos. they are knocking on everybody's door. you just hope you don't get to that point where things become frothy. >> we're an hour and three minutes into trade. it's time to say hello to an old friend. dow 13,000. 23 members of the dow are higher. we also, of course, have a good day coming through on mcdonald's which is now up well over 2%. down here at. nyse, almost down 5 to 1 and
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over at the nasdaq as proof point trade there. 3 to 1. so let's check in with chicago and see what traders there are watching. chief derivative strategist, joining us live from the cme. we should mention the expirations. >> absolutely. options expiration is today. you guys talked a lot about it. we've seen lighter volume so far this year. i wouldn't expect it to be crazy but i think as we head into the close, it's something that people should be mindful of because in the last half hour, as everyone finalizes their positioning, we've seen moves in there. i would be mindful of the customers watching for the last half hour today. >> we have a big event risk over the weekend, which is, of course, the first round of the french election. given that the socialist is going to win, do you think it's sort of priced in? >> i think primarily things are
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priced in. what you always have to be careful of, does any of the statements that come out of either one of those could be very dangerous for the market. i think one of the interesting things to watch, the last half hour could be interesting in terms of stocks. we see the vix at 17.5. one of the things that i would keep my eye on is what happens to the vix as we head into the close. it would not surprise me to see many people buying options. they don't want to take extra risk on something that we have no control over as we head into the weekend and many are concerned about what could lead us to go down that next week. >> it's interesting that christine has been trying to smooth over what is happening at the imf.
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she's trying to make that the not an event risk. we've got to leave it there. have a great weekend. >> thank you. >> from the markets to microsoft, beating analysts expectations, showing a 2% decline year over year but the revenue and operating income is up with the business division taking a lead. brent, good morning to you. >> good morning. >> >> i think the street has been surprised by the strength of the fundamentals of microsoft, especially what is to be one of the biggest product launches in their history coming up in the next couple quarters. i think it was a sign that customers are committing early and signing up for multi-year
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products so they are getting ahead of the ship of what would be the major milestones for the company which is a new version of office, windows, and the new version of server. that's the bulk of the company's profitability. we think revenue growth is going to reaccelerate and earnings growth will reaccelerate over the next year. >> as anybody who has followed this stock knows the battle we've had with $30. obviously we have some cushion above that level today. do you expect that to last and for how long? by how much? >> well, it's 11 times earnings. $60 billion in cash. therefore going to generate $30 billion in operating cash flow. so the numbers are really solid and i've said this multiple times that software is an
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expensive category. they are ex hib bitting accelerating earnings and it gives you cushion and then you see other software names that have not been executing as well intuit, oracle. relatively speaking, oracle, microsoft looks pretty attractive. >> all of that said, can you explain what is happening in games, entertainment, xbox? can this be excused for now in is it a sign of a more pernicious problem down the road? >> i think when you look at this quarter, the three big businesses that are the highest margin beat, the two lower margin businesses, which were search and entertainment missed. if you want two businesses to miss, these are the businesses thaw want to miss. we think they have problems
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against google and search and my kids are downloading games from their iphone, not to the xbox. i think they have issues going forward clearly with mobile gaming and certainly with our behavior which everyone goes to google for search. these are lower margin businesses and what we're trying to get people focused on is the bulk of the higher margin businesses generating the cash and revenue and earnings. that's the focus can. i think the other businesses are nice. they've got to get mobile right, tablet right. if they can get those businesses right, the stock is going a lot higher. >> i'm glad i am not the only one doing channel checks with my kids. that's a key stock be to watch. thank you. >> from tech to the financials, we've got a mixed picture after
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reporting earnings this week and the last. can the sector continue to lead markets higher? joining us to discuss this is the chief investment officer at matrix. david, always good to see you. >> nice to be here. >> i call it a decent kind of reporting period for the financials although the stock performance has not been great, what do you think? >> that's exactly right. we think it's going to be something that refreshes. they've had a great six-month period. the nice thing about this is they all either made or beat the numbers. the underlying trends were positive. loan growth was actually happening. so the outlook is pretty favorable after this pause we think they are set for another very good 6 to 12-month period. the financials have been devastatingly bad over the last few years. we think they are selling very inexpensive valuations. as they become more normalized and it's happening. >> is it happening? you say more normalized businesses and it's happening.
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the return on equity, they had a good quarter but it's still 9%. >> that's a very good point. let's say it's 9% and bleeds up to 10, 11%. over the last 50 to 70 years, if you have a 10% return on equity, you should sell it 1.2 times value. if you take morgan stanley at 1.2 times value, it's at 17.5 today. they've lowered the risk and even on meager earnings, the stock should be a lot higher. that's a case for a lot of the financials, whether it's jpmorgan, morgan stanley is our favorite, state street, all very good businesses doing well and we think the next 6 to 12 months is going to be better on an earnings front. >> morgan stanley made as much money from the investment banking. do you think wealth management, as we all get rich, the world gets richer, will ever be as sexy and valued for shareholders? >> well, there are many times in the cycles where wealth management is considered a good
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business. mutual funds sell at a premium. so we think as people are less concerned about the problems that morgan stanley has had over the last few years and the memories of the devastating returns leave us, we think they are going to get a higher valuation. it's going to have a more consistent earnings stream. >> the next 6 to 12 months, europe is still going to rear, as we say, its ugly head perhaps more so than we think. what if that becomes a key question mark not to mention the moody's down grade? >> they are going to be negative headlines and in any week or month that could cause the financials to sell off. the united states stress test is very important. the base came through overwhelmingly in very good form. they have recapitalized themselves. people are fighting the last
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battle, which is 2008, 2009, where the banks had a lot of problems. the valuations are reflecting the problems, not the better outlook. >> david, we're going to leave it there. thank you. >> thanks. >> it is a huge week for public debuts and we don't just mean david faber's appearance on jeopardy this weekend. >> it airs in may. >> that's right. i'm taping it this weekend. >> we know it's between may 14 and may 18. >> he looks a little nervous. >> i am nervous. >> you'll do great. just visualize it. >> apart from david faber's debut, we've had splunk and infoblox up 40% from its debut. we'll answer the receipt tore cal question after the break. [ male announcer ] if you want a luxury car with a standard power moon roof,
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here are some of the best performing ipos of the year. topping the list, guidewire. splunk, best first day pop in a year, epam i'm not as familiar with. and kayla tausche is joining us. where are we in this narrative. you look at what these things are doing on the first day and then compare it with what a groupon is doing now relative to the ipo price. are we getting toppy or what? >> yes. it's around 12 and i always said that was a pump and dump and the problem with them is they run out of cash because they collect money from their clients and
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then they don't pay it out. yelp is another case where it trades around the same price. what happens is there's a scarcity of top line revenue growth and that's one of the reasons that guidewire is up there. a lot of these are small ipos. the average ipo so far this year is only 116 million. when you have small ipos like that, it doesn't take much for them to go up in the aftermarket. >> it's not always tech, though, is it? >> no, it's not. but investors are being choosy. carlisle is not doing as much as people had expected in order to get the deal done. another thing that companies are doing is if they find that investors are not interested in the ipo or perhaps the price gets taken down a little bit,
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they have a very fluid capital markets that they can access and companies on file are saying, let's raise debt, reinvest in the company, and wait and see when that window reopens for us again. as far as the market that we are in right now, investors are being chos choosy. >> people are sitting at home looking at splunk that doubled in value. some people will be interested in getting in on the ipo and others will not and others will be disgusted as what they see as snouts in the trough. it looks like a casino that could double in value. that's not a market working properly. that's not a market functioning to allocate resources to companies in the way that it should happen. surely something is going wrong here. >> no, i don't agree. i think splunk is a leader in
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their category. they actually on a nongap base made money in the second quarter. a lot of people didn't realize that. when i look at tech companies, i look at the last six quarters and almost cash-flow positive. >> that's not the point that i'm making. the point that i'm making you shouldn't have debuts of this magnitude, that's a mispriced ipo surely. >> you're right. the underwriters are making a lot of money on green shoes. on splunk, they're making $36 million. and on tum, they had $27 million. what the underwriters doing going to companies, it's a tough ipo market, in the back room, they're saying we're going to make a lot of money -- >> i think it's a supply and demand issue. we haven't had as many ipos this year as last year.
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the actual number of ipos is up. but the proceeds are down. it's up 26% in this asset class just this year alone. if you have a little bit of deal volume compared to previous years, they're looking to jump into those stocks. >> these guys are paying a lot of money to anticipate what the price should be when it comes to market. they're not pricing this stock at the ek whe equilibrium in th market. >> given the small flows attend of the day, you're not losing that much money when you're selling a billion-dollar company. in fact, you increased the value. >> the clients of the underwriters that are gegt their enormous profits. the public doesn't get it. >> that is true.
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on the first round it is usually the investors who are institutional in nature that buy. >> being well connected. the truth of it, isn't it, francis? >> the underwriters are giving the option to the clients. nobody can get them. lot of people overlook that. there are two things going on. >> guys, i want to end on just one note. we talked a lot about the ipos and what they're doing. i want to talk about the outlook for the back half of this year, it's important to note that we have seen a backlog driven market. $33 billion of deals on backlog. a lot of companies are just waiting in a queue to go. lot of bankers that i talked to
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expect a little bit of a drought in the back half of the year. >> thank you for that, kayla for leaving it on a bright note. >> sorry. here's a bright note -- >> this is the s&p 500 back at hq. where you can see all of the issues. boy, are we at the upside. it's a sea of green. straight ahead this morning -- the mcdonald's conference call is under way. we'll have the very latest from that. stay with us. the general's your soul mate? dude what? no, no, no. he's, he's on my back about providing for his little girl. hey don't worry. e-trade's got a totally new investing dashboard. everything is on one page, your investments, quotes, research... it's like the buffet last night. whatever helps you understand man. i'm watching you. oh yeah? well i'm watching you, watching him. [ male announcer ] try the new 360 investing dashboard at e-trade.
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all right, mcdonald's conference call kicking off this morning. right around 10:00 a.m. shares are about 2.5% after the company reported earnings. we have the latest from "the call." >> david, as you know, the earnings and revenue were in line. 1.23 on share. the buzz yesterday was that numbers might fall short on the numbers in europe. that wasn't the case. they came in solid at 5%. on "the call," soon to be ceo acknowledged that the current economic climate is challenging. and they're dealing with mixed consumer sentiment. on europe, he mentioned that
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austerity and the sovereign debt crisis are proving challenges. on consumers purchases power, strong promotions were a big part of that. china, seeing a slowing down there. last but not least, cfo peter ben sen talked about the inflationary environment. they're expecting that for the second quarter, compression. >> thank you. the dow up 107. right after this. great shot. how did the nba become the hottest league on the planet? by building on the cisco intelligent network they're able to serve up live video, and instant replays, creating fans from berlin to beijing. what can we help you build? nice shot kid. the nba around the world
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explorer card. get it and you're in. welcome to hour three of "squawk on the street." here's what's happening so far -- >> things that come across that buffeted us like rising oil prices, in my judgment it won't hurt us as was the case last year and the year before. >> the one missing piece nobody is saying they're going to build a new facility, a new plant. they see hiring being incremental. bottom line, was in line. but those comp store numbers, day look good and global looks
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really good. and revenue was in line. >> mcdonald's basically a menu invention and a technology company, people don't think of it as that. they consistently been able to reinvent the menu. to me, one of the continuing themes of this earnings season, better than expected growth in industrial nations. ge has it. >> a look at the s&p 500. >> making money on a nongap basis. we're generating cash. making nongap money. it's a good business. >> this is the beginning of david, if you will, of battle of american airlines. we see think us airways and american airlines combined would be the preeminent airline in the
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world. >> good morning. happy friday. stocks are sharply higher for the first time in three days. . the dow is looking at a gain of about 107 points. best time in a couple of sessions as we mentioned and for the week it's up almost 2%. s&p is up more than 1%. nasdaq is up 21.5. midstates petroleum and info blox both trading higher on their first day of trading. let's get to the road map this morning. some new data. showing us just how close that presidential race will be come november. the president nchg ahead of gop nominee mitt romney the newest poll results. some voters concerned about the economy may have something to say about that. and we'll talk qe 3. the world's largest burger
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chain, what mcdonald's ceo had to say about the first quarter. talk to an analyst as well. and the next tech battle field. and it's been two years since the bp oil spill in the gulf, we'll go live to louisiana to see how far deep water drilling has fallen behind since that disaster. all that and more is coming up in the next hour. first, though, more news on a potential merger between us airways and american airlines. sources say under the deal being discussed it would be branded with the american airlines name. it would be based in texas. again, no definitive deal on the table. only an agreement from the unions on the us airside which is key if you were trying to make these marriages work. it's crucial to get labor behind it. we'll talk more about the
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possibility of that actually happening this hour. we'll take a look at some of the markets. gary, what a wild week for new issues. >> yeah, i want to say about this american airlines thing deal that you just mentioned. doug parker has really been, if you think of what he's been able to do with this company, it was american west that became american airlines, don't bet against that guy, he's had a very good track record of making deals work. a couple of thoughts here, remember two weeks ago we showed a nice chart on a friday, we showed what the earning estimates looked like and we showed you there was a huge dispersion, estimates hadn't moved higher. carl, the fact is, once again, analysts estimates were too conservative. obviously you have a couple of companies that missed. over a general report card let's say for the last couple of
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weeks, maybe the stock market was right reflecting over the first three months of the year where stocks should have been based on. on the overall earnings. >> we discussed how some other metrics, credit, high yield weren't confirming some upside dates. >> that continues to be the case. since the beginning part of the year. let me talk about ipos. it's been an amazing week in the ipo world. deals that are priced above their initial range. it's been many years where you have the moves after price where you have that range. i was on the floor when they priced tumi. people are amazed at what's happening in the aftermarket. where the's the m&a that follows. there's a correlation between the two. we don't see m&a where we're
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seeing the ipo market today. >> we just showed you tumi which had a big day today. down today. groupon is zeroing on half of its ipo price. zynga has been down. >> but in the last couple of weeks, they have priced above the range and allocated in a favorable manner and they have been able to maintain it unlike some of the deals that you mentioned which made their highs right on the first day. >> we miss you the first day. but the glasses are back. >> big "street signs" show today. i'll be watching. let's check in with rick santelli. good morning, carl. well, i think anybody who's watched me over the years realizes that i have been consistent on a topic, a big topic, and that's bailouts.
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i'm not a fan of bailouts. i'm a fan of institutions being allowed to fail and if we have allowed to institutions to get too big to fail, we need to address that. but we haven't. in specific terms i'm talking about mortgage and principal forgiveness. this issue is popping up again. the federal housing finance agency, this group is the regulator for the ggsc. the new principal forgiveness plan being put forth supposedly can save $1.7 billion. i'm not sure i believe that. i think it could have some negatives associated with it, for people current on their mortgage may not be current to get involved in this program. ed demarco said recently at a
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brookings institute meeting, hearing, talk that he was speaking at about this topic, he said over the past six years, many efforts have been launched be i the federal government to spend the losses rising from the housing prices. almost all of them required trial and error and were more difficult to implement. i hate trial and error when tax money is behind it. the path of least resistance is least legislation. nobody is going to put forth a principal forgiveness plan at the house. but going through ed demarco maybe they could put some pressure. i want to get senator bob crocker to discuss there. we couldn't get it set up for
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today. my apologies, senator. he'll come back early next week and i want to hear what he thinks about doing the end-around congress to put taxpayers dollars at risk once again in a trial and error-typesetting. carl, back to you. >> it's not the trial that bothers people but error. >> if there's any more errors i would like to see a fuel trials. >> rick santelli in chicago. new results in if nbc news/wall street poll. small six-point margin separating the two. >> good morning, carl. politics as you know is the ultimate trial and error business. and this poll shows that we're going to have a long ride until election day and likely some twists and turns there. first of all, look at the broad outlines of a race between barack obama and mitt romney.
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some good news for president obama, he's up 49-43. a similar six-point edge that he held last month in march. his approval rating is up to 69. good news for mitt romney, he's consolidated support among republican primary voters. 58% of them in march when he was still contesting with rick santorum. now 70%, that's the first step in political recovery as our pollster said yesterday. here are some numbers that are fascinating and set the table for the general election. the issue of likability. 3 to 1, obama has the edge over mitt romney. but obama only has 40-34 sharing your position on the issues. flip that around, romney, on who has good ideas of changing business as usual.
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that suggest as peter told us we're looking at an election that each candidate has a 50/50 chance to win. want to get the republican response to some of those numbers and talk about some other issues, ranking member of the joint economic committee, senior member of the weiays and means committee. clearly there is the path if the economy is the story. >> you can feel this at home. republicans have had their individual candidates. but now they're coalescing behind the candidate. it's time to engage washington. i think at the end of the day, economy is going to be key
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element for voters. >> we're seeing some signs of manufacturing coming back to this country, only argument from the gop it could be better or is there a message beyond that sf. >> it should be a lot better. here it is three years, there are fewer people in the market than since president took office. people are anxious for a sustainable economy. but it doesn't feel that way back home. >> you have been critical of the fed. you introduced the sound dollar act that would give the fed a single mandate, do you believe the improve thamt we have seen in the economy is almost entirely fed-driven? >> i think the fed did a good job of calming the waters, since then, i think they have tried to do too much. trying to make up for a white house and a congress that's not
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addressing regulating taxes in a significant way. i think more quantitative easing adds more uneasy. the more the fed does, less the white house and congress take responsibility for what they ought to do. >> when we heard these rumors, notion of a sterilized twist, your reaction was what? >> don't do it. we don't need it. that's what job creators are looking for. we're speaking to the committee here at the lunchtime about how we focus the fed, give them the right role for the future. strongest economic growth. how we continue to target inflation in a rules-based way. how we open it up from voices for the entire economy. that way, they can react to emergencies as they should. but a sound dollar gives us the
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strongest economic growth. >> you know, if you chart the intrade contract for the president's re-election and the dow, they essentially trend together, so with the dow up double-digits or close for it for the year, does that make you feel that the president's prospects improve sf. >> normally, yes. back home people don't feel that wealth effect right now. they don't feel good about their future. i think we're hopeful. we have states like texas that are doing better than others. but generally, people are still very cautious in businesses again, taxes, regulation, the health care issue, still keeping them cautious. >> finally, your thoughts on vp, does that interest you? still part of the silly season? >> we have an embarrassment of riches among the vp candidates. we're going to end up with a very good one. >> thank you. kevin brady joining us from texas. when we come back -- this
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roller coaster of a week in the markets, find out how you should be getting your money ready for the weekend. big election in france. [ male announcer ] if you believe the mayan calendar, on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k).
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so who's in control now, mayans?
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quick check of the markets. dow, 13,066. s&p is at 1385.39. here for his take on the markets, art cashman. people are talking a lot about
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volume and specifically volume on down days relatively to volume on up days. >> there's an old rule of thumb on wall street, if the volume picks up, that's what they call the distribution day that the implication that people got more involved. it might look like smart money. there's a concern that volume has been light. i talked about seasonal patterns a lot. the expiration week in april has one of the strongest biases on the upside. historically it might be the best week of the quarter actually. >> the week we're in. >> the week we're in, the week that's ending this afternoon. >> does that make you think of last spring? >> yeah, it's deja vu all over again. you and i have discussed at
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other occasions, you look at things at initial claims, they're beginning to follow the same pattern that they did last year. they looked great from september through late february/early march. then they turned choppy and sideways. we're seeing things that are repeat from last season. >> we'll be on the lookout for headlines out of france. this election is more than just another french election this time. >> certainly it could be critical. you know, it's one thing to get elected and it's another thing to govern and people can make promises. sarkozy's opponent is making promises that fit around the austerity plans that are in there. further down the line, we'll be having elections in greece as well. >> finally, ipos, some people want to make a big deal of it. is it statistical tisly helpful
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market right now. >> we went through a flurry where we didn't have many of these. looking for new things to invest in. i think that's given us a happy period. i would like to see if it lasts another month or so. >> i pity the ice cubes in your house. >> it's going to rain, a perfect excuse to stay in. mcdonald's getting a big boost from the first quarter, what the ceo said on the conference call. back in a minute. ♪
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good to see you, jeff, welcome back. >> good morning. >> anything on the call that adds, subtracts from the numbers this morning. >> no. i think people were pleased with the ult ares. especially going into it. there were a lot of reason for concern with europe slowing down and concerns about the earnings. they met on all fronts. very solid result. >> what explains europe, i can't imagine its micro strength? what is it? >> the european con summers under considerable pressure. we're all under agreement that mcdonald's in that region are anticipating volatile results in the coming quarters. mcdonald's is in the value business. in the u.s., mcdonald's will hold on fairly well there. it will have to push more value
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in the near-term. >> $106 you're not talking very far between your price target and where we are right now. anything in the news today considering you reconsider your rating? >> no, i think our preference would be discretionary in the higher growth world. but within that quick-service world, mcdonald's the steady eddie. we don't expect it to be our best performer in our restaurant group. at the same time, if you have a well-balanced portfolio mcdonald's fits well in it. >> it's been a top performer for a while. finally food cost/inflaix, moderating in the second half or coming back. >> we're expecting moderation. we do our own analysis in the quarter. we expect it to be stable in the
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second quarter before easing in the back half. >> all right, jeff, appreciate your adding some insight to an amazing number today. thank you so much. >> thank you. >> jeff bernstein joining us. bells about to sound across europe. we'll get the closing action live after this break. you know, typical alarm clock. i am so glad to get rid of it. just to be able to wake up in the morning on your own. that's a big accomplishment to me. i don't know how much money i need. but i know that whatever i have that's what i'm going to live within. ♪ ♪ ♪ you know, those farmers, those foragers, those fishermen.... for me, it's really about building this extraordinary community. american express is passionate about the same thing.
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lot of news out of europe. german business confidence. uk retail sales.
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the french election this weekend will color trading in the week to come. what to watch on saturday and sunday. >> what's interesting this week is that for all of the jawboning, actually in hindsight, this hasn't been too bad of week for europe. this is a session chart. you'll see in particular the spanish market has pulled away to the upside. we're now up 2%. back up of course from those almost march 2009 lows. lot of that is driven by the banks. if i show you where we are overall for the week, for all of the excitement for tuesday and the rally, in fact, we have gained over half a percent.
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the net net for the week, it hasn't been too bad. that's seen in spanish yields. let's check on the close today. we'll see that we have green across the board. here we go. closeding out for the week in western europe. >> the european markets are closing now. >> spain has done reasonably well. greece going towards that election. the bank's decisions there have been pushed back. a moment ago, i mentioned for the week perhaps it's not been so bad for spain. yields in spain have if anything fallen sharply during the course of the week. we're just below 6%. as carl said, w watching the first round. because there are two of the french presidential election, the polls indicate that the challenger who you see on the right, the socialist, will beat out nicolas sarkozy and then in
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three weeks' time, they'll round up, we believe that the socialist will potentially win. two implications for investors. first implication is the degree to which socialist will be able to rein in finances moving guard. and the second is, the potential fallout that he won't get on with merkel. what we'll be watching moving guard will be the premium that investors demand to hold french debt over german debt. this is where we traded through the course of the year and you'll see in anticipation of this election, that premium at the margin it's not huge, but at the margin it's risen now to a three month high. let me mention the. french banks if i may, this call from bank of america, look at how the french banks have traded. a general call from bank of
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america on banks through europe, they say overweight over the 12 months. they believe there's the potential for significant upside because they're so far from their mean valuations. >> you're by far the best telestrator in the building. nobody works that screen like you do. >> i only use the green lines you see. >> thank you, simon. have a good weekend. >> you, too. gary is up next. gary? >> carl, i read a lot of stuff very early in the morning. something caught my eye related to europe. it was interesting. there was a survey that said 51% of the new property purchases in central london, the high-end properties were purchased by people from china, hong kong, malaysia and singapore. you know where the money is being made and you know where
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the money is moving. in the same story, you see that -- there are 351 billionaires in asia. 251 in europe. north america, 332 billionaires. the last several years in terms of where the financial capital markets, have been impacted, that data shows you. i want to switch gears for a second, as you were talking about a few minutes ago, carl, there was an interesting story that came out. the s.e.c. has charged two twin brothers in europe with stock scheme, they had a website, doubling the brothers being jo16 years o when they created this. the claim was that this was a
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algorithm program created by a trader. earlier in the week, carl, i told viewers to be aware that there are a lot of scams out there and many of them are associated with the coming facebook ipo. be careful. there was no backbone here. they were essentially making it up. to have 7500 people sign up for the subscription was very troubling. >> they were 16 years old when they created this website. >> yes, they got 75,000 people to sign on to this service saying that there was a robot picking the securities for them to invest, as a result, they were going to double. >> that is crazy. >> it is crazy. i'll be looking more into this. bob pisani joins us now. >> you know, it wasn't a great
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week economically, the jobless claims numbers have been trending up the last two weeks. housing, i wasn't happy with existing home sales, wasn't happy with new home sales and despite all this, what's happened to the stock market this week, put it up. the s&p is up 1%. look, i know, i get hate mail when i use the word decoupling. there's no such thing. by the way, i can use circles. isn't that powerful? that's why simon knows how to keep to the lines. germany did a little bit better than s&p. europe was mixed. i consider this a very good week for the stock market. concerned that the economic news has moved back in this opinion. going into the earnings season, we're only going to be up 1%.
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horrible and disaster. the numbers keep getting better, you know why, because the companies are all beating every single day. two weeks ago, everybody was in a panic. we're only going to go up 1%. today we're up 4.4%. and it keeps going up every day. bank of america was up. all of these stocks were up today. how about the revenue situation? thanks for asking. two weeks ago, 4.7%. today it's up at 6.2%. you saw that today with ingersoll rand. companies are beating but they're staying very conservative in their guidance. companies did a great job today. it didn't raise the guidance for the rest of the year. they already beat on this quarter by seven cents. likely, their numbers are going to be better into the second, third and fourth quarter. obviously that's far ahead.
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right now, so far, i'm pretty happy with what i'm seeing on the earnings. >> you're right. i'm thinking of under armour, what ebay said this week. playing things close to the vest because people don't know what the second quarter is going to be like. >> honeywell, aerospace, they're basically in the same situation, business is getting better, very conservative guidance. >> thanks, bob. let's go to rick santelli in chicago. rick, what's going on? >> well, we have a guest today, bob, he's been with us before and the topic today, the santelli exchange, my topic this friday, get around end-around games. what's going on fhfa trying to do principal reduction, one mr. demarco, acting director, not crazy about the idea, he's there
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to protect taxpayers, hey abowh about t.a.r. ? what about europe? a story in the telegraph, germans aren't happen. another end-around game going on. >> through the balance of payments called the target system in europe, the financing that's been going on is a little odd and has pumped up some of the balances, everything's gone through the bank through the balance of payments through the banks and through the printing system on local level. they can't handle the clat real. >> so if i was looking at this, the point is, when i read the newspapers about how much germany is on the hook, that number according to this article in the telegraph, might not --
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it's much bigger? >> much bigger than everyone has been talking about. it comes down to the collateral stresses. they'll trade treasuries and they'll trade bunts. >> on that, let's show a chart. it's 170. you have 28 basis points difference. ours is still under 2%. the reason that we see both the credit markets where they're at is because of this topic in europe, isn't it? >> it's all under stress. their concern, the return of principal. is the bubble going to burst in
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europe? on to the local level, the spanish one, just yesterday, suggested let's skip trying to give it to the sovereigns and give it right to the banks. because they're intertwine, the banking and the sovereigns in their financial systems -- >> the bigger the balloons get, the more apt it is to pop. still to come -- >> oh, cool. >> google glasses caught your imagination? what another type of tech would you wear? >> if you only knew the power. >> the ideas companies have up their sleeves when "squawk on the street" returns.
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swings in the past few sessions, a sell signal ahead of the earnings on tuesday? we're checking the charts. plus, pressure filing on chesapeake ceo aubrey mcclendon. lots to trade at top of the hour. back to you, carl. quick check on microsoft. up more than 5%. to move a stock of that size is not easy to do. but after the numbers last night, some of the good numbers out of revenues the stock is at 32.65. lot of investors will be interested to see how long it can stay there and meanwhile, the war over mobile innovations fight on. before that battle ends, some experts are already seeing signs of another one brewing. longtime tech lum mary hinted at that on "squawk box" last month. take a listen.
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>> it's a wearable computer. it takes all of your motion and all of your exercise and all of your physical activity. it will track your sleep cycle. all of that data can uploaded on to the internet. it can be shared with your doctor, spouses and kids. it's aimed straight at this trend for people to be able to live healthier lives. >> that's right. we're talking about the next tech war being wearable computing. joining us now is sarah, good morning to you. it's fascinating stuff. there's a word for this. you call them wearables. your point to start with, innovation is coming. can you talk about that? >> innovation is already here. i mean, as you heard him talk about, we're seeing innovation for wearables in the health and
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fitness base, what's coming is broader application of wearables for navigation, social networking, media, commerce, and google glasses are the -- the best and loudest example of what's come zblg yeah, the project glass which got some pickup over the last couple of days. we know the smart band out of nike. shoes are being turned into social megaphones, what do you mean by that? >> shoes manufacturers like asics are embedded technology that can tweet your status while you're running a marathon, for example. we're seeing innovation from oakley, we're seeing ski goggles with heads up displays em badded
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in them. we're seeing a golf watch based on the andriod platform from mo motorola. >> you argue in order for this really succeed in the broad sense of the word, that i have to get the support of the five big software platforms, apple, google, microsoft, amazon and facebook. >> so n that race, who do you see leading the pack? >> well, that's right. because without that connection to the consumer, it's just geeky hardware. right now, we see apple in the lead for this moment. apple has a quiet lead. they haven't done a lot to cat liez this category. we have seen accessories for iphone and ipad, like a vibrating wristband, tracks your sleep quality that are available at the apple story and places where apple accessories are sold
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today. >> right, but android may change that? >> that's right. we see google as really making an aggressive play in this base and actually i think very well positioned to take the lead in this market at least in the short to medium term, because they have a platform that any company can modify, and build an end to end solution for not just an app or an accessory. >> my favorite is nokia filed for a patent for a vibrating tattoo. if you get that sarah, you have to hacome back. >> absolutely. these wearable devices are really about connecting people their environments and giving them more information about their environments and their bodies and letting them do cool stuff with it and so we're really at the beginning of a
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brave new worked. >> great stuff, sarah, thank you so much for your team. when we come back -- the state of deep water drilling. it's integral for our energy independence. can the energy fully recover? we're back after a break. guys. come here, come here. [ telephone ringing ] i'm calling my old dealership. [ man ] may ford. hi, yeah. do you guys have any crossovers that offer better highway fuel economy than the chevy equinox? no, sorry, sir. we don't. oh, well, that's too bad.
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[ man ] kyle, is that you? [ laughs ] [ man ] still here, kyle. [ male announcer ] visit your local chevy dealer today. right now, very well qualified lessees can get a 2012 equinox ls for around $229 a month.
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two years ago today gallons of oil started spilling into the gulf of mexico leadi ing to the biggest disaster. how drilling has been affected by the bp oil spill. >> carl, don't forget right after the spill as they were trying to figure out if there was any damage to marshes like this, it was a sustained still, now drilling is back and the permit process albeit slowly is also moving forward. a long way to go before we get back to prespill levels. frankly lot of oil companies have simply moved resources out of the gulf. >> it's coming back slowly. we're up to about 22 riggs working in the deep water gulf. the bad news is, we were at 32
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before the spill two years ago. and we were headed to 42. but the best guess at the end of year will be at 29. >> in terms of jobs, according to reuters, a rig employs about 400 jobs. there are more than 1500 oil and gas firms just in louisiana. with revenue over $4 billion. many of them either laid off people or brought on more debt. one company interestingly enough hasn't scaled back and that's bp. >> bp is still active in the gulf of mexico. we have five riggs running in the deep water environment. the same number of riggs that we were operating prior to the events of 2010 and we continue to be an active player in the gulf of mexico in the development of the critical energy resources this country
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needs. >> ironically production in the gulf is down. but production overall in the u.s. is up. like places in north dakota. as we have seen by this whole experience it comes with a risk. >> lot of time to heal. good stuff, brian, thank you so much. don't forget to send us your tweets this morning. microsoft is the third best performing stock on the s&p. still playing some catch-up to apple on some levels. which leads to our twitter question -- microsoft is to apple as blank is to blank. need any help? uh, nope. just, uh, checking out my ad. nice. but, you know, with every door direct mail from the postal service, you'll find the customers that matter most: the ones in your neighborhood.
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print it yourself, or we'll help you find a local partner. and postage is under 15 cents. i wish i would have known that cause i really don't think i chose the best location. it's not so bad. i mean you got a deal... right? [ bird cries ] go online to reach every home, every address, every time with every door direct mail. and on small business saturday bothey remind a nations of the benefits of shopping small. on just one day, 100 million of us joined a movement...
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and main street found its might again. and main street found its fight again. and we, the locals, found delight again. that's the power of all of us. that's the power of all of us. that's the membership effect of american express. today is gonna be an important day for us. you ready? we wanna be our brother's keeper. what's number two we wanna do? bring it up to 90 decatherms. how bout ya, joe? let's go ahead and bring it online. attention on site, attention on site. now starting unit nine. some of the world's cleanest gas turbines are now powering some of america's biggest cities. siemens. answers. when we got married. i had three kids. and she became the full time mother of three. it was soccer, and ballet, and cheerleading, and baseball.
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those years were crazy. so, as we go into this next phase, you know, a big part of it for us is that there isn't anything on the schedule. a friday edition on the squawk on the tweet. microsoft earnings are moving higher today, but still playing catch-up to apple that has been slipping lately. we're asking you to finish this analogy.
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microsoft is to apple as blank is to blank. jason tweets lebron is to kobe. good but not great. microsoft is to apple as a tree is to do a dog. one of my favorite -- gary, microsoft is to apple as danny devito is to and schwarzenegger in "twins." >> you know, carl, i want to ta talk, look at apple today, you mentioned earlier, look at the intraday, we had this intraday reversal again, the super bowls, those that have said that the s&p will be 1500, 1550 later this year, they love the action on the tape today. we're getting this reversal continuing in apple. it's not having an impact at
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least today on the overall s&p. many of those super bowls have been pointing out to me that this is great, great action. >> not only that, spain and france, their fifth straight week in the red and we're up for the week. >> yes. when we were on the exchange earlier this week, we ted out many days what the impact has been. i'll watch you at 2:00 on "street signs." >> i'll head them in just a moment. rick santelli, you're looking at spread between credit markets and equities. >> absolutely. ever since the credit crisis and the liquidity, i have been remissed in recommending selling equities. there are many companies doing well in this environment, it's


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