Skip to main content

tv   Squawk on the Street  CNBC  April 24, 2012 9:00am-12:00pm EDT

9:00 am
bank. thank you for being here. we'll have you back very, very soon. make sure you join us tomorrow. "squawk on the street" begins right now. right now. >> good tuesday morning. welcome to "squawk on the street." the latest standard&poors price index has just been released. as you can see at the bottom of your screen, we will take a closer look at those in a moment. but, first, take a look at futures. a little give back after the big 102 point loss on the dow. and then over in europe, a relatively successful auction out of italy and spain. overall, a mixed market with some red and some green across the pond. time for a road map on this tuesday. at&t's earnings do bet estimates but there's some troubling clues.
9:01 am
namely, a miss on the number of iphone activations. is there cause for alarm? >> meanwhile, apple continues to fall this morning. wall street analysts, maybe they mark the top when we've got all of those $1,000 price targets. >> that stock is down 16% as guidance on some new describers. but the debate rages on. some upgrades and downgrades this morning. >> and 3m beat handling no question there. raises the low end of its guidance for the year. but can the strength and its industrial businesses offset what is still a weak display market. >> finally, facebook before going public, the take away profit growing slowly, sequentially at least. >> all right, let's get to at&t. wildly held qs as you all know. posting first quarter profits, 60 cent a share. at&t saying it sold 5.5 million smart phones but also adding
9:02 am
that it activated 3.4 million iphones. that was down from 76 million in the fourth quarter. it raises questions about apple which we want to get to in a minute. the wireless margins at 41.6% were better than anticipated. average revenue per user up 1.7%. a bit better than anticipated. the stock looking up this morning because of those two numbers. you see it right there. 41.6 versus what had been 39 even for the first quarter a year ago. so not bad on those fronts at all. and the number for at&t looking fairly good. >> there have been a lot of chatter in the last few weeks that both at&t and verizon would disappoint. the chatter was wrong. verizon had a very string number. so people started thinking wait a second, maybe it's share take. it turns out that these two companies are performing
9:03 am
marvelously. verizon are taking more share than iphone. these are widely held companies that are making people money at a time when a lot of people are worried about the stock market. these are really strong signs for the u.s. economy, i think. on the note of the u.s. economy, it's 10:00 a.m. eastern that gives you a sense as to business formation, for example, and what they're seeing in terms of enterprise. so we'll listen closely at 10:00 a.m. because sometimes you do get some key macro sense there from at&t. >> it's very funny, the earnings season. everyone says is it good or is it bad? i don't care. we heard chatter. it's qe 2 -- no, no. there are companies that weren't supposed to do that well and they're doing great. aged there's other companies whose stocks are going down.
9:04 am
it's that simple. that's what's going on. >> you never know what you're going to get. >> right. fair enough. >> net flix, for example. >> not spending a lot of money. >> capital expenditures. verizon and at&t would start rivaling up. they weren't spending as much. that hasn't happened yet. we'll see if there's a catch up in capital expenditures. keep that in mind, by the way, because less cap x means perhaps less money being given. >> i think these cap x numbers are very important. although texas instruments does call the bottom in semiconductors this morning. that's important, too. >> you talked about yield being your insurance. >> it's prettiedier than con ed.
9:05 am
when you take a look at these things, these are dutch masters, okay. they never lose their value. yeah, people want to go with the rothco. yeah, rothco is good, too. is there something with the realists, at&t, verizon, they're real assetss. >> stocks is my -- let's just say it's my hob bee. >> meantime, het lease talk about apple. it's hard to separate from apple today. the big earnings event will be tonight. the company expected to post two fiscal profits of 10:04 a share. revenues just above $38.6 billion. apple shares looking to bounce back from correction territory down to more than 10%. earlier, they've fallen in nine of the last ten trading sessions. and we're down to 80 bucks.
9:06 am
>> when you get that level of optimism from analysts, you newlywed even equal it. you just can't. i mean, when guys come out and they say listen, this is the time. here's a thousand dollars. what happens? you just say oh, man, no matter what happens, even though the company is based on earnings basis, you can't equal that kind of enthusiasm. >> oh, yes, there's no doubt about it. i think we may have a chart for you of iphone activations ready. and it's interesting, ofblg. seasonally, you've got to know where things are. at 4.3 million, at&t activations of iphones, that was the buy side is anticipating. that is going back to the will they sell 33 million iphones? which is a buy side number that we've heard. what does that mean for the next quarter? we're not going to get it until october, at least, we believe.
9:07 am
>> everyone is piling on. so let's put a little more gasoline here. armed holdings. this is a chip company that's involved with apple. not saying anything you want. so lilt's get all of this on the table and let's step back for a second. apple is an inexpensive stock that i have been saying should be invested in, not traded. it's an inexpensive stock that's doing quite well. suddenly, everyone is doing well on it. that lowers the expectations. could it trade down to 5.25? this is a $63 stock that's suddenly a v $65 stock. do we panic? >> a lot of that move up that we saw was on multiple expansion. it wasn't necessarily based -- we've all said it's been incredibly cheap. it always has at least based on historical multiples. but that being said, it's not as though the earnings growth rate
9:08 am
was increasing. so now we're giving them up. >> how about the ipad? remember those things? i guess they're thrown away. now, am i a defender of apple? they're going to netflix me. they're going to google me. those are two horrible things. why did they go up instantly? because there are morons out there who don't know how to play the game. but they love the pull the trigger. >> and you say to yourself, who paid up? and the answer is idiots? people who are unsophisticated? i'm trying to be very statesman-like here. these are people who didn't read to the end yvette statement. >> so what is the approach tonight then with apple. given what we've heard from
9:09 am
verizon and at&t. the iphone, grant it, there's an ipad. it's really important for apple and its growth rate. >> how about you donate on it and buy into the weakness because after they report, there's weakness. the company has got a lot of cash. it's got that dividend. it's got a clear path. it -- this is a stock that has traded. and then we saw some information. it trades data after it reports. there's no hurry. there's no hurry to own apple. people love to panic. the google -- is there some new memo that came out which is when in doubt, panic? like let's break open the glass. -- >> i know somebody who maybe wrote that memo. >> but, look, apple revenue has groan over 73% in three of the last four quarters. so is it a company that is essentially competing against itself, right? where the records are just hard
9:10 am
to keep that pace, jim? >> the michael phelps issue. >> yes. >> and the answer is it's a great way to look at it. >> what? >> he's not going to win 8 gold medals again. >> no. and now we're trying to figure if four is enough. we would have loved it. except for now, the subscribers are back to where they were. >> i think your point, can it out do itself is what happened. this is the 6'6" high jump. and now it's doing 6'9". everyone else is doing 5'4". >> right. >> i'm using any analogy i can. >> you're going everywhere here. >> it's the red sox. they're up 9-0. let's go and turn it off and put on the bruins because they look good. >> did you see jeeter last night? >> four for five? >> i hate him. he's got the babes, he's got the numbers.
9:11 am
>> i hate seeing the olgd guys turn it back on again. he's got the 30,000 square foot home in florida. >> he did sell his pad in new york city. he's downsizing a little bit. >> i'm not jealous of hedge fund managers. i'm jealous of jeeter. >> let's move onto netflix. the video subscription service hosting a first quarter loss and projecting slower subscriber growth. this is netflix looks to move away from its, of course, dvd via the mail, that in its signature red envelopes which still arrive in my house because we are still in the '80s and loving it. >> mine, too. they' they're screaming off the toaster. >> i was trying to stream on the train down to washington this week. it's impossible going 75 miles an hour. >> and by the way, the metro
9:12 am
liner moves just as fast. >>. >> all right: on netflix. second half of the year, more competition. somebody said to me, you know what, the mote is toast. the mote being the competitive mote that netflix had. it doesn't quite rhyme, but it's close. >> i like it. >> and so the question for netflix is in the second half of the year when you're going to be relying on growth and streaming, can you reelly believe that you're going to hit sows subscriber numbers given that they're coming on. people are going away from netflix. >> iffer going away from it, then you should be revisiting your questions about the company. they've got an enormous programming cost ahead of them.
9:13 am
a $4.3 million liability that depends on the stock. >> you just mentioned it. going for the monoty python thing was brilliant. the mote is toast? it's like a budgeting span. and i think about this and i think about the leadership is what do you pay for it? >> netflix argues even after the stars expire, do you believe that? >> i don't think they're liars. as soon as you start talking about the reviews that your programs make, then you're up against jeff because he makes some pretty good programs at time warner. i don't want to hear about the reviews. i don't want to hear about we've got great programming. i want to see numbers. i want to see 32 million domestic subs. i want to see europe. it's moving into europe.
9:14 am
>> people think it's spain, but we don't know, i guess. >> spain? they're taking away -- they're repossessing the tvs in spain. they must be watching it on their clocks. their clocks. >> people wanted to play with fire and netflix is fire. i'd rather play with softballs. like 3-m. >> let's talk about 3-m. moving back to some blue chips, 1.63, that's a dime above. contributing some results and transportation businesses where orders are up more than 8%, i think. it's displaying and graphics down 11. >> europe was not that good. it was flat. asia was actually down 1.9d%. but they talk about organic
9:15 am
growth accelerating. 1.8% organic goes. 2.5% organic. you want to bargain, honey well is 6% organic, but that was friday and we've forgotten that. >> all good. >> no, eden said something about a window. do you want to explain what the issue was for him? >> i've got to tell you. i feel what eaton is saying is that china, which they thought was going to come back on line q 3, it's not going to come back on line until q 4. europe is obviously bad. eatin has got a lot of fire power. >> say again? >> i don't think utex was that bad. you've got organic sales at 1%. but the revamping, they're moving more towards aerospace which is where eatin says the money is.
9:16 am
autois on fire everywhere. trucks, some people feel have slowed. is that too granular for you? i'll step back and say remember, trucks are a huge part of the american economy. realize that allison transmission came public one month ago and everybody hates it. this thing came at 23. it's at 21. now it's at 19. all the people who issued at 23, hey, they don't like it 19. >> on a day when ford gets investment, great. big story that we talked about this morning. >> i remember when we used to sell ford commercial. it was good as cash. boy, what a day those were. johnny cash these days. >> you remember when it went public. white head and weinberg. >> i called on edsel ford, not henry. henry wouldn't take my call. >> now i'm doing what he does. >> when we come back this morning, we'll dig deeper into those s&p numbers, which just
9:17 am
issued. we'll break down the cities that are winners and losers. also ahead, adam parker. we'll find out how low he sees the s&p going in 2012. hanging onto some modest games. a lot more "squawk on the street" continues in just two minutes. minutes. your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
9:18 am
between black and white answers... ...and 1,000 shades of grey duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services.
9:19 am
9:20 am
let's get back to some data that was out about 15 minutes ago. home price, report nine cities and both composites hit new lows in february this year. your first on cnbc, vice president at standard&poors. thanks for being with us. what's the bright spot here? i understand there was a slight rise in february month over month seasonably adjusted? >> there really isn't very much bright spots here. some of the annual rates of change are improving. they're still largely negative. and very few rows on a month-over-month basis. i wouldn't say there were very many bright spots. both composites hit new lows in february. that's not very good news. >> no, it certainly isn't. and, ma'am, what is going on in
9:21 am
atlanta? another 17.3% this year over the last year. >> atlanta is in bad shape this year. california, phoenix and the sun belt hit real lows two, three years ago. atlanta seems to be in that phase of the cycle. it's not improving at all. >> i have trouble with that. i was on the sun trust call last night. talked direct lly about atlanta mortgages. i have a problem with the whole survey. you could argue that horton is saying things are getting better. toll are saying things are getting better. all have some degree of credibility. i'm trying to dove tail, maureen. maybe the companies are all just liars. i have trouble with that. >> yeah, i mean, those companies, they're basically looking at new home sales and construction. if you look at housing starts, we're not seeing an extreme amount of increase anywhere. the housing market is still really very low.
9:22 am
housing starts, home sales, our numbers are at cycle lows. they're really not showing any turn around at all. so i apre with you. >> well, maureen, thanks for your insights. appreciate you joining us. >> if you haven't heard this yet, film maker james cameron is teaming up with eric schmidt in supporting an invention that they think is out of this world. expecting to announce plans to send an unmanned spacecraft to asteroids and mine them for gold. what are they really looking for in their venture? you can tweet us and we'll get some responses lateer on this morning. you can see rare earths, i guess, except minus the earth. >> well, avatar did that. without the avatar, people would have done better. sigourney weaver was fabulous. she looks dynamite. >> yeah. yeah. >> lead with the camera to aim
9:23 am
for the skies. meanwhile, don't forget to enter "mad money" sweep stakes today. jim's 500,000 follower on twitter. >> wow. >> if you are the person -- you're trying to be it. you can't do that, carl. you can't be the 500. the rules don't allow it. it's like the rules of battle creek michigan. >> you will be flown in to cnbc headquarters for a taping of "mad money." to enter, simply tweet jim cramer. that's exciting. how far off are you? not very far? >> i'll tell you, i'm closing in on it. as we talk, i'm only about a thousand away. you better get it in very soon. >> if you become my 20,000th follower, i'll give you a subway from the bronx. >> we really have to go here, carl. >> i know, busy day. >> who better to run with than cramer. we'll get his mad dash after the break. break.
9:24 am
9:25 am
9:26 am
about three and a half minutes until the opening bell. radio shack, same store sales down 12%. >> i've got to go commando here. >> it's down here now. that's where it is. it will not contain the shoptalk. shack. there it is. now they did the loss. they've got the cash, the same-store sales. no. >> this is kpaps. this is what happens. stop speculating.
9:27 am
>> you'll do that again someday? >> well, if anybody else is like it, i'll be right down. >> we will get the opening bell in just a couple minutes. don't go away. tle toy trains
9:28 am
and now i build them. i am a bigger is better kind of guy. i absolutely love building locomotives. i knew i wanted to design locomotives from when i was very young. [ jahmil ] from the outside it looks like such a simple device. when you actually get down into the bare bones of it, there's so much technology that's submerged. [ rob ] my welds are a signature, i could tell my welds apart from anybody's. you lay down that nice bead and you look at it, i love it. they don't go together by themselves. there are a lot of little parts, and everyone has their job. [ scott ] i'd love to see it out there on the open tracks.
9:29 am
and when i see it, i'm gonna know that i helped build that thing. [ train whistle blows ] here she comes! [ bell clanging ] [ train whistle blows ] wow! [ charlie ] well, it's one thing seeing them built, but then to see them out here, pulling freight across america, it makes us proud. ♪ like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering, web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
9:30 am
the opening bill, a look at the s&p 500. the etf advisors celebrating the listing of the northville high income master limit partnership. and over at the nasdaq, investment capital management celebrating its sponsorship of the power shares tennis series. very nice. i know you're a big player, jim. >> oh, yeah. i've got to tell you, carl. we had a good discussion during the break. industrial companies. here we go. bingo. i didn't think united technology was really that good. suddenly, we've got this dichotomy. how could things be so good and so bad? the answer is these companies have fabulous balance sheets.
9:31 am
they know what they're doing. have faith in u.s. corporations because that's who's making the money. >> they have exposure to europe. that is -- you can't hide what you sell to. >> ppg, dupont, eatin. huge exposure to europe. but they've been able to contain the problems. they've been able to contain the problems. i am just focusing for one moment praising people who don't get praise. ceos who figured out that united states wasn't that strong so they moved to asia. europe isn't that strong, so they pulled back united states. residential construction coming back, despite shiller. don't forget, the oil and gas boom. these are companies that are deeply involved with all of those phases. look at this. what a remarkable company. we know what we're doing. >> look, when europe tends to
9:32 am
hit the market broadly, it doesn't just do it for a day. so you would wait to get into some of the growth name that is you look. >> yes. let's take -- i like to use ross stores as the quintessential company. why ross? because it's not in every state yet. i find that that is a stock that if you ever wanted to see a pure domestic stock, you have to buy it when it's hit severely on europe. now, i don't regard this rally in europe to be anything other than -- i'm not going to say peopling talking about their demise. >> do you want to talk about this facebook? >> yes. >> sequential, profit, growth slowing. costs are up. they hire a bunch of engineers. >> it's some of the best i've ever seen. did we know that there's seasonality? obviously, when campaigns are really on fire, there's no seasonality what so ever. i still think it's worth being
9:33 am
on the deal. and that's the bottom line. we have to say, jim, do we think it should be in the deal or not? i do like to see revenues on a really good ramp. >> you say i've got to own a perlite folio because of my financial. well, i'll own visa. these are so not financials. these are technology plays. the paper and the plastic. but people have hidden and they've been huge winners. and they don't quit. i suggest that what should join them in e-bay. >> you can call those two companies the chicken financials. >> the chicken financials. they are where you hide when you don't want any real financial exposure. >> speaking of momentum stocks, chipotley. >> here's my problem. i look at the chart.
9:34 am
i know they've done good work. but i'm just saying, everyone sees chipotley having that quarter 12% sales. that's not enough. any other restaurant chain would kill for 12% sales. i'm not killing them off yet. but like apple, they're having profit taking galore. don't catch a falling knife. i am not a butcher block. one of the things i put on my p.c when i used to be a hedge fund manager. >> finally, some of the ipo names that we got. a little expensive. >> you've got these companies selling multiples to sales. carl, the -- you know, an ipo has to be contained by something. and the answer is multiple sales are not, not excessive in the companies that have been public for a while. but they are excessive on both toomey and squank. and demand wears, everybody loves it today. >> let's get to bob and david on the floor.
9:35 am
>> you know, yesterday, mr. pasonni mentioned that key theme to potentially be on the run in europe. it's a lead story today in ft and the new york times. i thought we haven't mentioned europe at all, maybe we could start there. >> and i think the important thing here is how do you balance austerity and how do you get growth? and that's been the issue. you get this austerity treaty that's going on. so, number one, can you get growth? and how do you pay for it? >> do you have a financial transaction tax. the bottom line, that's what people are wanting. so we've got to find someway to pay for this. i think that's going to be the big issue. did you see the triple a rating? everyone was scared witless yesterday about the fact that that could happen because the dutch government essentially fell. they couldn't agree how to narrow the budget deficit. it was a pretty small budget.
9:36 am
>> one thing i've learned is the fiscally conservative entirety of europe. they can't agree on how to reduce their deficit to 3%, nobody can. >> that's a very good comment. that's an indication of how tough things are. i know you hit on app 8. le. i talked to walter over at at&t -- excuse me, bcig. i think the important thing here is the activations, 4.3 million, a bit below some expectations. their upgrade rate, 7%. so 7% of users upgraded their phone in the last quarter. it was 12% in the prior quarter. the important thing is that's a little slower than people anticipated. and i think the question is what's the cause of that? and walter feels it's the upgrade policy. not that people don't want to buy iphones, but they changed their upgrade policy. january 2011. that makes it more difficult.
9:37 am
so if you want to get a $200 subsidized phone, you may have to wait 18 months, 24 months instead of 12 months. >> that's a very key point. and that subsidy helped the margins at at&t which had a 41.6% service march. >> so it's the upgrade policy. >> but that's a key thing. not enough phones sold. >> but you're not going to pay for more it. the subsidies are at&t and verizon are incredibly important. >> now you pay $600. that matters. great morning for earnings. i love it when big, boring, global industrial companies with the illinois tool works of the world, the company that makes things that you don't always see around you on the number. look around. parker. all beat.
9:38 am
illinois tool work, ryder, parker raised their estimates. and then we had 3-m raising the lower end of its guidance. they, too, were above. >> is there enough respect being paid in the u.s.? >> globally, too. i mean, if you've got a heavy presence, usually they're mentioning that sales are soft in europe. that's why i watch the global companies. a lot of these companies are 20, 25%, 30% even sales over in europe. so, yes, despite all of that, they're still doing really well. this morning, from s&p, earnings growth, 4.9%. we were at 1% two weeks ago. now we're almost at 5%, okay? so i'm not saying that this is amazing, but the numbers are coming in better and we're consistently raising day after day after day we're raising the estimates on the first quarter. i'm more optimistic now than i was a week ago on the earnings fund. still concerned about euro. >> that's a good place to end.
9:39 am
over to you. >> as you can see on the bottom of your screen, going to 85 cent, i believe. >> yeah, 13% increase. another $7 billion in the bye back. that has been the decline in the market ever since they reported, maybe that stable loss. i think that's very, very important out there. at&t, a widely owned stock that is on fire today. you usually don't see that act like that. let's shift the bonds. take it over, rick. >> well, you know, a successful set of options occurred in spain. but i would say successful with air quotations because i've always said it's about what you want to pay, you know. moving paper isn't necessarily about, you know, all the issues that we read regarding spain and the ltros. it's about what investors are going to pay and what they want in return. it's about price. they sold three-month paper today. now, the last time they sold three-month paper, it was about 38 basis points.
9:40 am
this time, 63 basis points. 6-month paper. last month, march, about -- let me think. about 83 basis point. this time, 158 basis point. these rates have almost doubled. let's look at that 158 basis points for six months paper. our ten-year is at 1 9d 4. our five year is at 183. those are years, not months. this is the issue with europe. we can all talk about austerity and politics. but in the end, a country that is spending more than it takes in needs to borrow. and the cost of that borrowing is what's going to be very difficult to procure, especially at these rates. and what did that do to the euro currency? well, all clear. look at the 24 hour euros. comes in our time zone like a rocket ship. >> oh, thank you very much, rick. we're going to talk oil for one second. obviously, expectations were way low. the stock is going up.
9:41 am
let's go and find out more. >> well, we're looking at commodities across the board, jim. and we're looking at a comeback here. all eyes are on the fed. that's what they're watching. but we have seen gold prices make up all of their gains from yesterday's losses. and we're also looking at metal getting a bit of a bounce as well as oil prices, still a range for the wti crew between that $105 range there. but another key commodity to watch is the gasoline spread. keep an eye on this spread because this is really going to tell you what you're paying at the pump. look at how much it's off. now about 30% or so. several factors, the last people saying it was or bought. there was a lot of loans in there that have liquidated. but, also, we are hearing some news about refinely rios, perhaps being sold or being bought, rather, by others. carlisle group and sunoco.
9:42 am
so all of those, carl, are factors that could continue to pressure prices. it's good news for drivers paying a penny less for gas at the pump than they did a year ago. >> thank you very much, sharon. i want to do a couple names we haven't done yet, jim. coach; on the one hand, a lot of data about luxury goods in general. >> coach has been a stock that has overreacted the downside. i remember a couple times with the ceo. i said, listen, you talk a big game. i said tell me if this is the line in the sand. the guy has drawn lines in the sand and he has made money. a lot of people have reacted to the chart. the chart has this northface look to it. i am not a charter, but i respect the fact that people are saying, look, it's not enough. it's not enough. you know, lou frank is a pretty good exec. i don't want to go against him. maybe they catch a downgrade, maybe they don't. >> u.s. comps are up 6, 7 and margins are beginning to recover, which has been a while. >> that's not bad for me.
9:43 am
i know that there's a big china store. we've got to hear more about that. i know that this stock has traded with starbucks, historically. i know that's a strange, strange way to look at it. >> china? >> china. and young, too. young is a good example. everyone thaugt uum disappointed. the stock was at 72. it dropped to 71. now it's at 73. people are making way too quick assumptions and then the assumptions are proving wrong. >> also, today, we've got numbers on swiss watch exports up 15% and the high end, $3,000 and above some of the strongest numbers. a lot of it to china. >> good, i just sent my breitlang to the shop. i finished the show yesterday at 10, it was 9:25. i thought it was like ground hog day. >> raymond, what is that? yeah, that's nice, right? that's a gift for my wife four or five years ago.
9:44 am
>> viewer's choice time on "squawk on the street." tell us why it interests you. tweet it and one of our equity experts will give you a customized analysis live on the air. we've had stephanie in a couple times. she's amazing. so send your request t to @cnbcsquawkst. mining for gold in outer space. that's with james cameron and two google executives are hoping to do. what are they really looking for? you can tweet us that at cnbc. as we go to break, one more look at just about 14 minutes in the trading on this tuesday.
9:45 am
ing on . between 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.
9:46 am
only hertz gives you a carfirmation. hey, this is challenger. i'll be waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the spef hertz. but not how we get there. because in this business, there are no straight lines. only the twists and turns of an unpredictable industry. so the eighty-thousand employees at delta... must anticipate the unexpected. and never let the rules overrule common sense. this is how we tame the unwieldiness of air travel, until it's not just lines you see...
9:47 am
it's the world. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us. between 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.
9:48 am
,ibm speaking a little bit this morning. 17th year in a row that they have had a hike. it's up six fold since 2000, jim. >> i felt the judgment of the market when this number came out was too harsh. the stock had run. people were saying the revenue wasn't that good. it hasn't had a lot of revenue growth. this is going to make the earnings per share go even higher. this remains a go-to name. ibm, at&t, sound familiar? >> it does. and we should point out at&t shares are up about 3.5%.
9:49 am
that's a pretty big move. >> but you like pandora and zynga. i like ibm and at&t. >> i'll tell you what i like, i like zynga. >> by the way, you know, i mean, for a down home guy, the breitlang and the watch. >> where did you get that, t.j. max? >> there's a very nice t.j.maxx across the street. don't you underestimate them. that stock has been red hot. >> don't you dare. >> i won't do it. >> this is an an andovertie. i like the longer collar. >> do you like it? >> i do. >> are those pigs? >> these are when -- these are flying pigs. when pigs fly, apple will go back to 600. just kidding. just kidding. i think apple is fine. >> he does. he's just joking.
9:50 am
>> it's interesting that apple is down while at&t is up. >> let's go back in the way back machine. we've got eatin, we've got ibm up. if these are what people want right now, and i don't blame them because they are incredibly inexpensive. their bound sheets are inexpensive and they're inheriting the world because they are smarter than the average bear who is shorting them. >> nice. nice. >> a play on roads. >> yes. >> the trading day is yack. young. a lot more "squawk on the street" in just a moment. . >> announcer: up nictation, we let cramer loose.
9:51 am
watch where he'll end up when "squawk in the street" returns. with scottrader streaming quotes, any way you want. fully customize it for your trading process -- from thought to trade, on every screen. and all in real time.
9:52 am
which makes it just like having your own trading floor, right at your fingertips. [ rodger ] at scottrade, seven dollar trades are just the start. try our easy-to-use scottrader streaming quotes. it's another reason more investors are saying... [ all ] i'm with scottrade.
9:53 am
9:54 am
let's get to simon hobbs and see what's coming up in the next hour. >> way down, way down. help me out here, carl. the producers seem to be setting up -- i don't know what the collective is for bears, but there are a lot of them coming. we've combat adam parker coming for morgan stanley. he thinks he's going to fall 14% from here. we've got netflix who thinks it's going to fall $63. so i don't know. our cnbc producers, could it be that we'll rally from here? >> i have no clue. but i like the fact that we're spelling out the bear case as well as the bull. >> what is the collective now for bears, jim? >> i don't know, i'm still stunned. >> flocks of bears? >> i don't know. they're all on in the next hour. >> very nice, simon. see you in a few minutes. let's get to the six in 60.
9:55 am
six stocks in 60 seconds. a big upgrade for autozone. >> he's not just sears. >> biggest loser on the s&p is big lots. >> it didn't pan out. consumers that are weak. big lots. not any time soon. >> yes, deutsche also downgrading. tyson foods. >> as long as he's demanding ethanol, corn is going to go up. i'm going to sell, sell, sell. >> it's worth the whole price of the company. i like this call. >> got some earnings out of etx? >> i am an organic growth guy and they had organic sales at 1%. >> finally, and take your time here, 3-m and we discussed some of the internals. >> h is a dividend stock. they pay a great dividend. this is a really major comeback. look at how well they're doing, despite weakness in other places. there, they're forecasting very big organic growth for the rest of the year.
9:56 am
i think this company is well run. >> given the number of skus, you're talking a picture of the global economy. >> you know what, i'll take that dividend, sit on it until they come back. >> for more on those names, what's coming up tonight? >> ethan allen, this is a company that really doesn't have the pulse of what people are doing. it has traded very much with the stock market. when the stock market is up, the showrooms are full. when the stock market is not doing that well, the showrooms are not that full. ethan allen, a great way to measure the economy. >> equities. to equities. isn't that something? it's almost as, well, hold it. just a second. did we just get a peek in the stock market? it would certainly indicate that that was the peek. this was a coincidence indicator, not a future indicator. >> hersheys is amazing. this used to be linked to gasoline prices because so many of their sales are convenience
9:57 am
stores. now, they didn't create revenues, but they did have fantastic margins. this is a new hersheys. they've rationalized their cost. it used to be run as a cost. now it is a business and it is a moneymaker. >> i'm going to start keeping my distance. >> i'm down there with the moe, larry and schemp? >> maybe it's curly with the radio shack. we have a hard one out now. >> new home sales after a break. don't go away. ♪ [ male announcer ] aggressive styling. a more fuel-efficient turbocharged engine. and a completely redesigned interior. ♪ the 2012 c-class with over 2,000 refinements. it's amazing...inside and out. see your authorized
9:58 am
mercedes-benz dealer for exceptional offers through mercedes-b financial services.
9:59 am
omnipotent of opportunity. you know how to mix business... with business. and you...rent from national. because only national lets you choose any car in the aisle. you can even take a full-size or above. and still pay the mid-size price. i could get used to this.
10:00 am
[ male announcer ] yes, you could business pro. yes, you could. go national. go like a pro. welcome back to "squawk on the sterility." we have a lot of data. 69.2. we're expecting a number closer to 69.7. that is the weakest since january. if we look at april, richmond fed manufacturing index. that improved much more than expected. we're expecting a run of six. came out at 14. unrevised last month at 7. house price index. this is a february month-over-month number. the index increased three tenths.
10:01 am
that is bigger than the one tenth we're expecting. however, on this one, a huge revision of last month. released is unchanged. it's now down five tenths. new home sales, this is a march number. it was minus 7.1, minus 7.1%. and that is a number of 328,000. why does it look so weak? because originally, last month was released at 313. it's the revision, again. 313 moves up to 353. that number now moves to 328. but it is still down 7.1%. considering the revision. back to you, carl. all right, rick, thank you very much. of course, some analysis on those new home sales. >> well, it's interesting. because, you know, as rick was saying, this number is actually above expectations when you look at the number. but a big drop of 7% is because you had that upward revision in
10:02 am
the february number. what i like looking at is the 5.3 month supply. that's down from a 5.8 month supply in february. and we're looking for supplies to come down. what happens when supplies come down? prices rise. well, prices are up. 6.3% year over year on new construction. that's a very healthy sign because the builders will tell you they don't compete with foreclosures. but in a lot of areas, they really do. especially when you have investors coming in rehabbing these foreclosers. the biggest roadblock, hands down, is the mortgage situation. we've been talking to builders left and right telling us they have trouble with people getting mortgages, qualifying and getting those down payments. again, that's the issue. but these are some pretty healthy numbers thanks to that revision, carl. >> dianna, thank you for that. let's get to the road map for the next hour. markets rebounding from yesterday's triple digit slide
10:03 am
as the fed begins its two-day lead in today. we'll talk all the latest news with adam parker in just a moment. >> continuing the slight low as the streak gears up for the big earnings release. we'll digest everything we've got so far and talk those price targets with the analysts sticking. >> james murduch taking the stand today in london. dissecting the latest courtroom drama in just a moment. >> plus, netflix sliding big time after posting a wide quarterly loss. subscribers looking a little bit under pressure. we will talk the good, the bad and the ugly for netflix. >> all right, facebook's s-1 out yesterday revealing first quarter net income fell 8% to 2.5 million. one specifically troubling data point was that its revenue growth rate was falling. it fell to about 37% on the year.
10:04 am
investors starting to question that idea of a $100 billion evaluation. this is probably the last s-1 or amendment that we will get to the document before the company actually goes public probably in the next month or so. >> texas instruments beating the estimates in the first quarter as revenues drop 3% to an inline 3.1 billion. some guidance that exceeded many estimates, as well. >> i'm sticking with tech. we've got to bring you back to apple. shares continuing to slide this morning ahead of tonight's earnings. lots of chatter that at&t's iphone sales out this morning. a miss in that category. we will talk about that with bgc analysts who will join us later in the show. did you see the interview that at&t's mobility did on "squawk box" this morning? he did it twice. he said we're looking at new models -- just basically for phones that people wanted.
10:05 am
and then when he was asked had you seen the iphone 5, he saw a loom that phone for $99 and how great that was. not that that amounts to anything. >> one out of five phones that they activated was an iphone. >> but that number is giving some people pause as we head into the earnings from apple. and we're having an interesting day. and one that we don't often see with at&t shares up. up more than anticipated. up more than 1.7%. you had a 46% profit margin, let's call it, better than anticipated from at&t. we talked so often about how much -- so almost all of the value has been accredited to apple. not to at&t and verizon, the providers of the service. >> yes, joining us onset as well this morning, kelly evans. if you were writing the herd on the street, what do you think your thesis would be? >> about apple? i'll let them handle that one.
10:06 am
they're doing a great job covering it. i wanted to, if you don't mind, draw attention to one data point in the home sales data that i think is interesting. if you look at the fhfa home index. it doesn't get much attention. it only tracks government-backed mortgages. but for the year ended february, home prices were up 0.4%. now, that's the first 12-month increase that we've seen for this index since the 12 months through 2007. the housing day today, mixed bag, a lot of different stuff going on and the market is not reacting too much to it. if you look at this little glimmer of hope in what's happening in the fhfa side, it does still lend some credence to the idea that housing, if not bonding, is stlooes stabilizing. >> it's a process. not an event. getting back to broader markets as well, this morning. we saw some big declines across the board. we want to get some more insight from one of the more bearish
10:07 am
strategists on the street. chief equities strategist sticking with his price target of 11.67 on the s&p. adam, welcome back. good to have you again. has your faith in 11.67 gotten stronger as the spring has started? >> we take the view of the 2013 earnings. but how people are going to feel about those earnings at the end of 2012. so i can be the really change my mind when we're just getting the first quarter of 2012's results, right? so the year end target is something people focus on. but i don't really think about it that much. when you talk to institutional investors, you're just trying to take a direction of the machlett. i don't think you're going to want to pay a lot more for corporate earnings. when you think about the u.s. november, december this year, i don't think you're going to feel very optimistic about growth and policy. >> what a lot of people will say, adam, even if they share your fundamental bearishness, other central banks will come in, give us the liquidity we
10:08 am
need. that's going to keep fundamentally in the market. >> it always feels difficult to fight the fed in the near term. but i don't think you could have a hundred quantitative easings. you probably are going to have 99. at some point, you're going to fight the notion. i think that corporate balance sheets are in good shape. companies are earning very good profit margins. i don't dispute that at all. i think that government has been propping up a lot of it. let's think about what we have. a huge fiscal cliff. tons of fiscal stimulus. >> but do you really think that they're not going to intervene and prevent the sell-off from happening? >> why would there be a sell off? that's kind of the debate that you have to have. my sense is if you have record margins, and a very polarized house that has to solve a lot of this by the end of the year, risk reward to the negative about how you're going to feel about it. we're no different from consensus on the next couple of earnings. i think by the end of this year and next year it's a bigger issue. so i'll give you an example.
10:09 am
the analysts' estimates are for 12.5% earnings next year. at the same time, we have about a 500 basis points fiscal cliff calendar year next year. so a lot has to get worked out by a pretty pa polarized group of people. >> we're not talking about the cliff. you are basing this projection solely on how you would value earnings in 2013, presuming the cliff is not part of that calculation. >> well, you know, when you said the year-end price target, we don't have to focus on it. but i'm in my office at the end of 2011. i'm thinking what are 2013 earnings going to be and how are people going to feel about that in 2012? that's the 11.67. it's not just a u.s. cliff. it's europe with some comp complacency there. so there's a number of factors that i think you have to consider. but, number one is the cliff. i agree, investors are not focused on it right now. i think usually ann lists, and
10:10 am
you can ask them, around july they sharpen their pencils on next year'sest matesed. >> so greenhouse was on "fast money" last night and he used a very oun fortunate expression that markets were getting a kick in the face. so there are some that are very, very worried about it. what is it? expiration? the bush tax cuts, payroll tax cuts expires, extended unemployment compensation expires. >> it's a number of things. so that won't all come slamming together. some of it will be declayed or tempered. but the issue is if it's 500 basis points the economy is only growing two or three hundred. so you've got a real risk. >> you've spent a lot of time -- >> sorry. >> you've spent a lot of time -- or your team is spending a lot of time dividing up stocks between growth and value. and you saw it's not an ocd thing to do. it's very important for investors to do. and 24% will move between those definitions. once you've done all of that
10:11 am
work, what conclusion do you come to as to where people should put their money? how does it change the decision that they make? >> when we wrote earlier this week, i think you're eluding to the note we wrote yesterday, that you prefer growth to value right now. when the economy is weak, you pay a premium for growth, as that's scarce. if you look at this point in the cycle, growth companies tend to be the estimates a little bit more. so if you're worried, like i am, that by year end next year the estimates are too high, you're going to want to earn more growth companies. so i think that's one main conclusion. and the second would be stocks that get kicked out of the growth universe, they tend to under-perform for as much as two years. the reason is they're not growing fast enough to be growth anymore. so they're in that sort of no-man's land. and they usually -- we call it purgatory. >> the last year you expect that to continue this year and next? >> we do have that for this year. i don't really know about next year.
10:12 am
we'll probably evaluate it over time. but i think style does matter. and i think crithidia will do well. it's out-performed by about 10% in the last year. obviously, it's broad-based. it's not just one security. so i feel pretty good about that in this point of the cycle. >> finally, adam. you're joining us on two day of a fed meeting. i wonder how you respond to those that say you're right about the hundred times, the 99 times where there would be policy. but maybe you're underst mating be bernanke. skbl i'm sitting next to him to get his interpretations of the fed. he has rightly pointed to him being there. it's pretty tricky that if you don't get a meaningful pull back in the economy and you get too close to the election, you may not have the ability to do more unconventional policy. i think if challenge is, maybe
10:13 am
the worst thing for the u.s. equity market would be the economy holds in fine for another couple months. and then rolls over. and then, all of the sudden, just like you were psyched a few months ago, you're going to be not psyched about it come this fall. and i think there's a good chance that happens. >> adam, thanks so much hfsh coming in. >> all right, up next, james and rupert murdoch taking the stand again. this time, facing an independent investigation. we're going to have the latest on the courtroom drama right after this break. is to take you from where you are... to where you need to be. and we're not just talking about points on a map. with a more intuitive delta website and mobile app... and the most wifi equipped planes. we let you be everywhere at once.
10:14 am
innovations like these are extending our reach so you can extend yours. and now, even at 30,000 feet you can still touch the ground. greetings from the people here sure are friendly but some have had a hard time understanding my accent. so to make sure people get every word of the geico savings message i've been practicing how to talk like a true chicagoan. switching to geico could save you hundreds of dollars on car insurance... da bears. haha... you people sure do talk funny. geico®. fifteen minutes could save you fifteen percent or more on car insurance.
10:15 am
10:16 am
all right. james murdoch taking the stand today. he stands by his testimony that he never saw an e-mail that went beyond a single reporter and separated himself from the news of the world scandal. standing next to me right now? >> i think the ethical risk was something and the legal risk around that was something that was very much in the hands of the editor and the decisions on things like public interests and the like. i wasn't in the business of deciding, you know, what to put in the newspapers.
10:17 am
>> sorry about stepping over mr. murdoch's sounds. >> sarah ellison, how does this inquiry differ from the murdoch from what we've seen a couple months ago. >> well, basically, this has been an opportunity for them. they're being questioned bein a judge, not by british m.ps. it's really changing the conversation about phone hacking into something entirely different, which is about the relationship between the press and british politicians. and about murdoch politicians. so this is looking -- yes, it's looking at phone hacking. but this whole broader inquiry is looking at what went on in the u.k. to get a british government that was so captive. and, so, the line of questioning that's very interesting today, particularly for investors and people who are interested in the business is a series of e-mails that have been now released over
10:18 am
the past two years that show a back and forth between news corporation and the british government over how that deal was going to get through. >> that he're really too close. and what comes out of it are there a number of british mps who were cow taling so much that, in fact, the spotlight has turned today from news corporation to the british, exactly. >> now, are there any expectations that we are going to have new revelations? something that could impact, for example, the way the stock trades? >> can a news corporation and would it ever try to make a run? and people are sort of watching
10:19 am
whether or not that's going to happen. because, of course, when the deal fell apart, it put a whole lot of cash back on the table. they had a big buyback. >> it's years down the road. so if you're a long, long term investor, this may be something that you're looking at. >> there's nothing today. he's given up almost every single public-facing role that he has. now what he has now is a tv job inside the company where he can do purely operational stuff. he doesn't have to deal with politicians or other major figures. and i think he's going to try to hunker down and do that for a while. because it's his father's company, it's much easier to do that. >> and tomorrow is his father, correct? >> 81-year-old rupert murdoch.
10:20 am
>> all day and maybe part of wednesday. >> back over to you, guys. >> thanks very much, david. let's head over to brian sullivan and what radio shack is doing today. >> yeah, it is an ugly day. nearly 8%. and i've got a note here at morgan stanley who put this out as a quick note based on a note. he thinks that head winds might get worse before they get better for radio shack. he said the sprint business is tough. sprint has been tightening up its credit requirements. it means people are coming in to buy fewer new phones. that's hurting radio shack. and he said that any everett that radio shack may make to bring over the verizon customer could be hurt by what he calls a gap in demographics, if you will, between the verizon customer and the radio shack customer. radio shack is now trading at
10:21 am
lows not seen since 1993. we're going back to the tandy corp. days. carl? >> it's tough to watch. we'll see what happens later on today. meantime, net flix swinging to a wide loss as the company's new subscriber fails to impress. so as they work hard to win back users, how will the company fair in the face of rising competition. we'll talk to a top-ranked analyst who is sticking by his sell writing in just a moment. >> i play in a band that participates in the hedge fund rocktober fest which is in favor of a leg to stand on. a leg to stand on is a charity founded by a wall street guy which gives the financial support for underprivileged children with prosthetic limbs. i love raising money from the community and really to show that wall street cares. i'm tim. i'll see you tomorrow and i'm
10:22 am
living well. presenting androgel 1.62%. both are used to treat men with low testosterone. androgel 1.62% is from the makers of the number one prescribed testosterone replacement therapy. it raises your testosterone levels, and... is concentrated, so you could use less gel. and with androgel 1.62%, you can save on your monthly prescription. [ male announcer ] dosing and application sites between these products differ. women and children should avoid contact with application sites. discontinue androgel and call your doctor if you see unexpected signs of early puberty in a child, or, signs in a woman which may include changes in body hair or a large increase in acne, possibly due to accidental exposure. men with breast cancer or who have or might have prostate cancer, and women who are, or may become pregnant or are breast feeding should not use androgel. serious side effects include worsening of an enlarged prostate, possible increased risk of prostate cancer, lower sperm count, swelling of ankles, feet, or body, enlarged or painful breasts, problems breathing during sleep,
10:23 am
and blood clots in the legs. tell your doctor about your medical conditions and medications, especially insulin, corticosteroids, or medicines to decrease blood clotting. talk to your doctor today about androgel 1.62% so you can use less gel. log on now to androgeloffer.com and you could pay as little as ten dollars a month for androgel 1.62%. what are you waiting for? this is big news. ♪ strea-ea-ea-ea-eam
10:24 am
♪ ...stream, stream, stream... ♪ whenever i want you, all i have to do is... ♪ [ female announcer ] introducing xfinity streampix. stream your favorite movies and full seasons of shows instantly on any screen. find out more online. president obama traveling in an effort to prevent interest rates on student loans doubling this july. good morning, aeman. >> good morning, carl. you're right. the president is going on a spring college tour today. he'll be at unc this afternoon and later at the university of colorado in boulder colorado. and one of the things he'll be pitching is a proposal to freeze the interest rate on a key
10:25 am
federal student loan program at 3.4%. if the president and the congress don't act, that rate will go up to 6.8% this summer. >> it's all about cramping down on some of the debt that american college students are increasingly finding themselves burdened by. student loan debt is estimated at around 8$870 billion and $1 trillion. approximately two-thirds is held by people under 30. and, carl, if you want to see exactly what that student loan debt looks like, we've got this handy student loan debt clock calculating the debt burden on americans to the exact second. obviously, the people who have these student loans are a key voting demographic of young folks. that's a group the president did very well with in 2008.
10:26 am
>> so there's a political undertone to what we're seeing. >> all right. . let's talk about apple. clearly, there's a huge focus on where that stock is likely to trade down 7% ahead of earnings tonight. some suggestion if you want to play perhaps a gain staff, you should look to international traits. let's go trading the globe. joining us now, tim seymore and managing partner of cryogen managing asset. >> look, the components and the hardware part of the story are where i think you need to look. and everybody knows that apple turned this industry into a two-horse race. cogitation ualcom certainly pointed out a couple good and bad things that's going on. the bad thing is they're running out of supply. and this is something that's
10:27 am
punished this stock. but ultimately, the demand for this product, they're in this position of basically having the iphone of chips. so they are in a place where they are the smart phone chip. and then i think you have to look at these plays. and taiwan which reports on april 30th, is another one. and they are the ones that are supplying a lot of these chips and are subcontracted out by qualcom. >> look at the components. >> as we were mentioning earl r earlier, the head of at&t mobile to wave around a white nokia, $99. obviously anxious to sell that. is it out for the count? or is it still a play? >> no, i think nokia is hanging in there. and i think the 900 is a last gasp. what's interesting is that nokia is more like take out plays than three years ago. but the windows mobile operating
10:28 am
system is something that i think maybe be a game saver for nokia. clearly, this is a game saver, i think, for a lot of the carriers. verizon, at&t, they don't like subsidizing $400 hand sets from apple. so the an dread system, i think are places where you're going to see competition for apple and samsung. but i don't think you're going to see these guys continue to give away much lead. i think they're going to continue to be over 50% of the smart phone market. and i think those trends underlying that sales growth is something you should follow, qualcom, tsn, ufc. these are all names to play. >> tim, thank you very much. you can catch tim every weekend and tuesdays, in fairness, right here on industries. >> all right. apple officially entering into correction mode last week sliding another 1% today. this is the first quarter results after the bell tonight. we're talking to an analyst next
10:29 am
who is sticking with his bearish stance heading into earnings. we're back in two. looking for a better place to put your cash? here's one you may not have thought of: fidelity. now you don't have to go to a bank to get the things you want from a bank. like no-fee atms -- all over the world. free checkwriting and mobile deposits. now, depositing a check is as easy as taking a picture. free online bill payments. a highly acclaimed credit card with 2% cash back into your fidelity account. open a fidelity cash management account today and discover another reason serious investors are choosing fidelity.
10:30 am
according to the signs, ford is having some sort of big tire event. i just want to confirm a few things with fiona. how would you describe the event? it's big. no,i mean in terms of savings how would you sum it up? big in your own words, with respect to selection, what would you say? big okay, let's talk rebates mike, they're big they're big get $100 rebate, plus the low price tire guarantee during the big tire event. so, in other words, we can agree that ford's tire event is a good size? big big
10:31 am
10:32 am
one hour into trading here are the stories we are squawking about. new home sales down to 328,00 ah annualized units. remember, february sales were revised higher. that indicated the fastest pay since november of '09. autozone and ah reilly automotive hitting new all-time highs. it is a new 52-week high as well for the chocolate maker which posted better than expected first-kwaurter earns. >> we should pay respects to at&t. >> look at that, 3.5% in the
10:33 am
wake of their results. the dow reports 3-m if we're looking where we are. 26 members of the dow 30 are higher. and very quietly, without a lot of fuss in comparison to yesterday, we have pa raise for the losses that we had on monday. over at the nasse doc this morning, not quite as -- not quite as positive, but, still, none the less, the breath of the rally to the upside. >> senior economics reporter joins us now with the results of the april fed survey. good morning, steve. >> good morning. the april headline from the survey is that the market doesn't expect much from the fed. but increasingly, it believes in the late 2014 guidance on race. that is keeping them low.
10:34 am
here's the reason. the group is more pessimistic on the economy and still pessimistic about the s&p outlook. you can see here, it's come down from our march survey. and now i think i saw the s&p at 13. it was 72 a few might be utes ago. pretty much no change expected through june. just a 2% increase. i guess you could say the good news is we're going to hold on to the gains. bad news is not much more to go from here. how about the out look from interest rates taking a look at what the group says about the 10-year. again, this number is above where it is right now. it was 260, now it's 240. it's like a quarter point rate cut. some of the comments were pessimistic to go along with this pest mystic out look here. hugh johnson says likely to impede equity price of this year and into 2013. a lot of talk about this fiscal
10:35 am
cliff that happens in december. the echoforia is finally beginning to fade as the market realizes that it was the result of unseasonably warm weather. that was something that the fed says you have this convergence of the fed and the market chatty take a look at when they expect the first rate hike. this is what they expected in march. you can see they expected the first rate hike in the first half of '14. now look what's happened. it's shifted. this whole bar has shifted. what was 28%, the leading expectation back in the march survey now. the second half of 14. so the late, 2014 guidance. and, guys, there's one thing i want to show you. two charts. i don't know how they work together. but it's the big puzzle for the market. here's the expectations for the s&p, that muted expectation here. and if you don't mind coming back over this way, mr. camera operator, here's the problem. this qe number is down. how these two relate i think is the $64,000 question out there.
10:36 am
how much of this muted outlook for stocks is the result of the muted outlook for qe. >> mr. camera operator, steve? they do have names. >> i know. i know. >> we love you, steve. thank you very much. turning out to be a very big day, as you know. even before apple after the bell last night. wanting to go up down to the nasse doc. >> the stock has been weak ahead of its quarterly report. losing ground in nine of the past 10 sessions. even looking at the options activity on apple. that's indicating big moves in the stock. we're talking about the highest volatility in over a year in apple options. so that's something to keep in mind. they're expecting to react to apple's earnings reaction. and the guidance the company gives on how many ipad and iphones it expects to sell in
10:37 am
2012. that's certainly expected to be a focus. those are a list of some of the suppliers that apple has. >> brian sullivan has it all covered for us. >> i want to give you a little more coverage on radio shack. tandy just keeps getting worse. the stock not seen since 19d 81. >> you have to go back to the computer days. head winds probably just going to continue in large part because of the sprint problems. big lots. this stock has wiped out 10 bucks a share. >> i wanted to leave you with a positive, guys. a line technology. really not a technology at all.
10:38 am
they make the invisilign brand of braces. maybe a good time for the economy. aligned at an all-time high. >> okay. brian, thank you very much for that. let's cross over and talk about net flix getting absolutely slammed today after it came through last night. tony joins us now. jane montgomery scott, was it really that bad? >> you know, i think the thing to understand with netflix is it's a highly leveraged story. and their ability to grow the streaming business. unfortunately, the output there suggests that there's a slow down. the question is is it a cyclical or a secular slow down. the company is saying that seasonality is the driver, but it could be the sign of a total market being smaller or more competition. >> yeah. . hastings is saying we are essentially trying to rebuild from a very difficult year last year. we said it would be a three-year process with 6 months into that.
10:39 am
and there's no need for any grand gestures. would you agree? >> i think they're trying to do the most that they can do. unfortunately, they're man onlaying the best of outcomes. their competitive position weakens. the one thing that is helping them in the transition is the fact that the dvd business hasn't slid as much as we would have expected. that's what drove the disparity between the stock's negative reaction. it's really the things that people don't value as much that are doing better. it's got to pay that money for programming for its users and then a back half that they are banking on in terms of adding a lot more streaming customers. how is it going to work? there's a lot of leverage in the business, but it can go the other way, can't it? >> well, the thing to keep in mind is that the 3.9 billion that you reference does not include the 1.3 billion they have as a current acounts payable. this is 4.5 to $5 billion.
10:40 am
and, unfortunately, it's really contingent on their sub growth. >> it's really hard to have a conviction. >> hence the stock down. but do we believe them? do you believe that they can do that? given the competition that you mentioned earlier and some people telling me that mote that they have, that competitive mote is no longer the case? >>. >> tony, can investors count on international growth? >> the problem is that the more that they grow international, the more that they lose. they kind of have a 50/50 hit rate.
10:41 am
>> tony, the price is $70. for those that are short, is now a good time to cover the short, do you think? or do you think there is a bigger story that will play out imminently, not 12 months down the line? >> i think the stock reaction would be more negative. i think we're seeing some short covering today. >> okay. we'll leave it there. tony, thank you for your time. >> the tech joint gets set to report its second quarter results. director of research and senior technology with bgc financial and he joins us now. and colon, let's get right to those att and t numbers. that seems to have created a little bit of concern. does that figure into your opinion at all?
10:42 am
>> not only the at&t numbers, 25% down sequentially. the verizon came in, as well. apple needs to excel or seas, particularly in china. let me tell you how we look at the landscape. we've got cells on the sidelines with apple and google with the buyers of e-bay and microsoft. if you want exposure, we've been saying e-bay for their mobile commerce and microsoft which is really going to get some traction for 2012. longer term for apple, you have to be aware of the fact that the carriers are really backing this microsoft platform because they want to get phones on a lower, average price. for this particular quarter, we just note that apple has gone up $197 since the last reported earn lings. that's a pretty big pop on the dividend news and the new ipad. both of those things are not surprising here. they need to continue to smash records. and we need to see international doing that. we're looking at 35 million
10:43 am
phones and 14 million ipads. >> if you don't smash numbers. >> at this point, there's speculation about whether it should go mass machlett or try to stay high end. what do you think is the better move? >> high end. it's very difficult to be mass market and maintain your margins, right? apple has done a very good job of building this coveted brand for themselves. and, you know, people pay up for apple units. it's very difficult to maintain that and still have the increase in volumes that people are expecting going forward. >> is it because of the nokia phone? >> it's a great question.
10:44 am
it hasn't flipped yet, but they want it to flip. and they're making lots of noise about having it flip. at&t is waving nokia around. >> but that's not the same as it flipping. they can come on the television all they like. if people don't want it, they will end up buying apple's iphones. and the danger is that you see this through the prison hmm of verizon and at&t. and the story is somewhere else with products that are still sold around the world. and we get two u.s. centric. >> well, we'll have that answer a year from now. we don't have that answer now. it is a very bold state statement that verizon made. and we'll see if it happens again. >> bud they were cut out of the iphone. >> but they did. they're making the claim that they helped create that android success in the united states. so we'll see if that happens again with the microsoft platform. that's their plan to do that for the december quarter. or if consumers are really
10:45 am
driving the decision. >> this is a 25 multiple stock. you'd say look out below. but it's 12. >> i hear you, right? so on a racial basis, you know, it's a very reasonable evaluation. but on an absolute basis, you know, you have to just go back to the fact that only five other companies have ever cracked that $500 billion valuation mark and they're trading now at about half of that, $200 billion. >> all of this talk -- >> i'm just talking about $1 trillion. >> but that doesn't mean to say that apple could not go a lot higher than it is now. yes, you can call it into the grave two or three years down the line. but it's hypothetical. >> absolutely. all of those things are true. >> but you're telling people to trade it down to 500. you don't think it's at fair value. >> i think the numbers that you see coming out will already start to show you some weakness in the iphone marketplace that there's already competition that's competing on one lever and one lever only and that's price. and that's got to impact apple at the french.
10:46 am
>> world's biggest automaker still gathering. we'll go live to beijing for the latest autotrends in just a moment. ♪ ( whirring and crackling sounds ) man: assembly lines that fix themselves. the most innovative companies are doing things they never could before, by building on the cisco intelligent network.
10:47 am
a body at rest tends to stay at rest... while a body in motion tends to stay in motion. staying active can actually ease arthritis symptoms. but if you have arthritis, staying active can be difficult. prescription celebrex can help relieve arthritis pain so your body can stay in motion.
10:48 am
because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. plus, in clinical studies, celebrex is proven to improve daily physical function so moving is easier. and celebrex is not a narcotic. when it comes to relieving your arthritis pain, you and your doctor need to balance the benefits with the risks. all prescription nsaids, like celebrex, ibuprofen, naproxen, and meloxicam have the same cardiovascular warning. they all may increase the chance of heart attack or stroke, which can lead to death. this chance increases if you have heart disease or risk factors such as high blood pressure or when nsaids are taken for long periods. nsaids, including celebrex, increase the chance of serious skin or allergic reactions or stomach and intestine problems, such as bleeding and ulcers, which can occur without warning and may cause death. patients also taking aspirin and the elderly are at increased risk for stomach bleeding and ulcers. do not take celebrex if you've had an asthma attack, hives, or other allergies to aspirin, nsaids or sulfonamides. get help right away if you have swelling of the face or throat,
10:49 am
or trouble breathing. tell your doctor your medical history and find an arthritis treatment for you. visit celebrex.com and ask your doctor about celebrex. for a body in motion. world's biggest auto makers joining us from china. joining us fray beijing is upgrading us from investments. great status today, as well. >> yeah, carl, once moodies upgrades to invest mate grade status which is expected to happen in the relatively near future. when that happens, the real impact will be the finance debt. it's estimated that ford's finance debt could drop in terms of how they're going to save by 300 million by three years. so the next big step will be
10:50 am
when moodies takes place, as well. we are here in china for the beijing auto show. and i'm coming to y moody's. we are in beijing for the auto show. this place is massive, especially by chinese standards. let me move out of the way. it goes down -- there's 40,000 square feet here in terms of the showroom and the reason that they built this dealership here is because of the explosive growth in demand for luxury automobiles. take a look at the largest luxury dealers. 3,000 in annual sales last year, both of those, bmw, mercedes, grew by 30% in 2011. the sales, however, starting to decline. that's why animals say, frat not, the luxury market will remain very strong in china. >> chinese people love to
10:51 am
protect and possess power and nothing does that better than a large luxury suv or a huge sedan on the road. it isn't about breaking or handling or acceleration. it's all about what statement i'm making and luxury serves that need in this culture. >> and no more is that more obvious than lamborghini introducing an suv lamborghini that will likely be built. and when it is, you can bet that they will sell it first here in china as well as in the u.s. >> phil lebeau, live in beijing tonight on "squawk on the street." straight ahead, senator bob corker will join us. we're back in just a moment.
10:52 am
i'm making my money do more. i'm consolidating my assets. i'm not paying hidden fees or high commissions. i'm making the most of my money. and seven-dollar trades are just the start. i'm with scottrade. i'm with scottrade. i'm with scottrade. and i'm loving every minute of it. [ rodger riney ] at scottrade, we give you commission-free etfs, no-fee iras and more.
10:53 am
come see why more investors are saying... iith scottrade.
10:54 am
hi, welcome back. want to show you headlines from the at&t conference call. they said on the call they expect smartphone sales and they continue spectrum acquisitions. on the broader economy, haven't
10:55 am
seen any lift from the economy so far in 2012 though they do say they see large businesses continuing to invest in strategic services. tweet time. james cameron of "avatar" teaming up with google's larry page and they are going to announce an unmanned spacecraft to asteroids and mine them for gold. which brings us to the "squawk on the street" question. what are page and cameron really looking for? tweet us your answer. we're back in a minute. your new lumia,k in a t thank you at&t. first, why don't you show her the curved edge... now move on to the slick navigation tiles -- bam, right into the people hub. see megan, colin has lots of friends. hey, colin, what kind of phone is that? whaaa -- oh megan -- when did you get here? [ clears throat ]
10:56 am
ohh yea no, let's... [ male announcer ] introducing the beautifully different nokia lumia 900. only from at&t. rethink possible. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus.
10:57 am
tdd# 1-800-345-2550 i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones to help me find tdd# 1-800-345-2550 possible trading opportunities quickly. tdd# 1-800-345-2550 i can also bounce my ideas off their trading specialists - tdd# 1-800-345-2550 on the phone or face-to-face. tdd# 1-800-345-2550 and i can trade wherever i want, whenever i want. tdd# 1-800-345-2550 tdd# 1-800-345-2550 the kicker? tdd# 1-800-345-2550 i pay $8.95 a trade. tdd# 1-800-345-2550 that's a deal in any language. tdd# 1-800-345-2550 hey... a breakout on a head and shoulders bottom! tdd# 1-800-345-2550 that's what i'm talking about. tdd# 1-800-345-2550 open an account and trade up tdd# 1-800-345-2550 to 6 months commission-free. tdd# 1-800-345-2550 call 1-800-540-0098 tdd# 1-800-345-2550 and start trading today. fiona here was just telling me that ford dealers sell a new tire like...every five seconds, how's that possible? well, we purchase 3 million a year. you just sold one right now didn't you? that's correct. major brands. 11 major brands. oop,there goes another one. well we'll beat anybody's advertised price. and you just did it right there, what's that called? the low price tire guarantee. wait for it, there goes another one. get a $100 rebate, plus the low price tire guarantee during
10:58 am
the big tire event. look at that. it's happening right there every five seconds. your not going to run out are you? no. time now for "squawk on the street." investing in planetary resources, and mine them for gold. this morning we are asking you, what are cameron, page, and schmidt really looking for? blue humanoids. and larry and eric want to claim google as the official search
10:59 am
engine of the galaxy. and mark tweets, i think the real question should be, what are they really smoking. i kind of was thinking the same thing. >> gold is really heavy. >> they fall back to earth? >> i assume this will not be on the sg and a on google's next income statement? >> the whole thing reads like some strange, bizarre story. >> you mentioned some of the early dow jones headlines last night said -- >> there was just confusion about what exactly they are going to do. sounded like they were going to get the astroid itself. >> they fly above our heads.
11:00 am
here's what you might have missed if you're just tuning in. >> welcome to hour three of "squawk on the street." here's what is happening so nar. >> this nation could be a full employment and back on its feet if we have leaders willing to stand up and articulate a path way. if you look at the ten-year treasury today, that's in the low 190s. i find that to be a proxy really for risk off or the fear factor, whatever your favorite phrase is, and a fundamentally bearish signal. >> these two companies are more than just iphone and widely held companies making people money at a time when a lot of people are worried are worried about the stock market.
11:01 am
there are morans out there. >> i've got to go commander here. >> it's down here now. it's where it is. the telestrator. >> and the opening bell for this tuesday, monday, april 24th. >> the worst thing would be the economy holding for a couple of months and then rolls over. you get too close to get the liquidity and all of a sudden, you're going to be not psyched about it come this fall. i think there's a real chance that happens. >> good tuesday morning. welcome to the third hour of "squawk on the street." the dow was reversing up 117 on a tuesday, s&p getting 8 back to 1375. a little up to 2791.
11:02 am
more than doubles the size of the program, big lots down more than 20% wafr the first quarter fall. let's get to the road map for today. markets are bouncing back after yesterday's loss. see when you should take advantage of this volatility and put your money in the market when we talked to the chief strategist. the bribery scandal is sure to cause can even more problems. two local officials dealing with opposition to walmart are with us live to get their take on that issue. senator bob corker is here to explain w explain why he is behind the mortgages. and how important is that to apple and the market at large? a lot more coming up in the next hour. we'll begin with apple. the stock on everyone's mind.
11:03 am
our jon fortt is live. good morning. >> good morning. it's going to be tough for apple to do its usually blowout. the ipad sales may have out paced reality. let's start with iphone. last week they activated 3.12. at&t activated a whopping 7.6 million units in q4 and said they did just 4.3 million that's down 43%. what does that tell us about apple? let's assume apple did better. international has been growing as a share of iphone sales and let's assume iphone sales are down only 19%, which is a very strong performance. that would put apple around 30 million units.
11:04 am
a lot of analysts are at 33 or higher. so what are the numbers to watch? on iphone 33 million apple will probably have to make that for wall street to be happy and that will be tough. ipad, the street was 13 million that. could be a stretch. international demand always slows down before the launch. finally, four million units. apple has not updated the lineup in a long time. back to you. >> thank you very much, jon fortt. you've got a busy night ahead as well. jon fortt back at hq. the dow holds on to triple digit gains. let's get the billion market dollar strategy. asset management group joining us here at post 9. bill, good to see you again. >> thanks. >> hope you don't mind us starting with apple. it's a general in the market. if the generals begin to falter,
11:05 am
what does that mean for everybody else? are you worried about tonight? >> you know, i think we still feel good about apple as a whole. the one thing you can say is they produce products that people want to buy. things are getting even better. obviously they are up against harder and harder comps. i think you also have to say we think there is another backdrop that even though we have bumps here, maybe there's other opportunities even with tech. you're seeing ibm and maybe the general may be tired, maybe some of its subordinates may be getting in the play a little bit. >> everybody wants to draw parallels to last spring. we all know what happened for the rest of the year. you think conditions are different this time? >> i do. it might rhyme but it's not exactly the same. one thing s. the liquidity issue is different. you don't have quite as much pressure on the financial system. we can look at the euro ois spreads.
11:06 am
they really haven't spiked out. i think you can say, some of that tail risk is out of it it there. we don't have japan, so that's obviously one that you can remove. so far, any way, you're not seeing it show up. we're close to the initial jobless claims. they have ticked up a little bit. you're not seeing that really big move. i think it's more of a reflection of just less improvement in the job market at the moment. but even today we have consumer confidence components. >> would you agree that a large part of the recovery has been fueled by policy, fueled by the fed? >> i think at least the low rate certainly helped. i would say things we look at on a consumer, you can see that their debt burden or interest coverage has come way down. i worry that the other low rates have hurt other areas. >> inflation and so forth. >> yep. >> but there's a school of thought, if fed policy has given us some support, right, the way that your dad hung on to your
11:07 am
bike without training wheels for the first time, as we get closer to the election, their hands will be tied, too, and if their needs to be some infusion of liquidity later in the year, you might not get it. coupled with the fact that expectations for q4 earnings are still pretty aggressive. >> right. >> does it give you any worries about the back half? >> i think it does give me worries. i think they are doable numbers. i think the other good thing is what you are seeing in the first quarter which is really good numbers. i'm like a bird and a hand and two in the bush. one way or another when i run the valuation numbers, what i think we have in hand, things are being looking pretty good. >> so far, tech and financial have been good about those guys. it's about defensive names. do you have a preference on which side of the bar bell do you like? >> i would say it's a mix.
11:08 am
we have a little twist on it where you're trying to grow. >> you're right. you stole the number out of my and grow the dividends over time. some of the more defensives you're not going to see dividend growth. that's the mix you want to hit. >> we'll see what we've got. it came in on a good day today. >> i know. i like that. >> thank you very much. >> thank you. >> get to the cme group this morning. rick santelli is here with the santelli exchange. >> yes. we have senator corker coming up at the bottom of the hour. eamon javers talked about the student loans and growing to $3 trillion. consider this.
11:09 am
there's not a lot of solutions put forth. you know, tough love. my generation used to have that phrase tough love. and tough love is when you look at things and you try to make them better and the act of making them better puts people in a situation that is a bit painful. but that's not where we're at. we don't see solutions. we see giveaways. we see debt forgiveness. the operative word is give. whether it's mortgage principal reduction or student loans and we can go on and on, but these are the biggies. we look at mortgage principal. ed demarco, public enemy number one, and i'll address that with senator corker. he is the head regulator that's supposed to be guarding for taxpayers the activity in the gses, the freddies, the fannies
11:10 am
but he's pseeing more pressure put on him. the student loans is also -- listen, if you want to fix what is going on with these or control interest rates on these, i can understand that. but forgiveness? total forgiveness? we're going to create a generation that doesn't take responsibility for actions. i don't care if it's a dollar a month. they should pay it off. and we are going to talk about senator corker about putting pressure on a regulator whose job it is to guard our money and they are not pleased because they are doing our job too well. >> i can't wait to see it. thanks very much, rick. when we come back this morning, walmart struggling to break into new areas. will these bribery allegations make it more difficult? two local officials will tell us why they are thinking twice about letting walmart into their
11:11 am
towns when we come back in two minutes. minutes.
11:12 am
11:13 am
do you dow's up 104. brian? >> the pain at nokia continues. no news on the stock but it's making another low. this stock, i believe, at an all-time low. either way, you've got to go back decades. we're down to 363. some of the industrial names, 3m with pretty solid numbers.
11:14 am
others in that industrial space, they are doing well. quickly, guys, first solar, the solar flare-out continues. how bad can it get for solar? >> interesting, brian, that on a day where an at&t executive waves around nokia on our air. >> listen, they've got a downgrade from fitch last week and said we have plenty of cash. there's no risk here. the market begs to differ, carl. >> brian sullivan, thank you. walmart's alleged scandal making headlines all over the u.s. smaller stores of what they call neighborhood markets to improve presence in urban areas, especially in new england, which the company has targeted as a major area for expansion. they are looking to open in summerville, massachusetts, near boston, but the plan is facing opposition from community groups. the mayor of summerville is
11:15 am
joining us to talk about what it is like, mr. mayor, to welcome wal-mart into your town. good morning to you. >> thank you, carl. >> this is a former circuit city site. no former proposal and you take generally as you're curious? walk me through it right now. >> wal-mart has been engaged with us doing due diligence as to this issue i'm curious and have some of the concerns over the allegations as so what occurred in mexico. >> because of their corporate practices or because of the unfair labor practices that they've been accused of and all sorts of cities? sg well, we strive to have the best business partners and community partners. walmart has been very forthright and recognizing the concerns, organizations, and different labor groups have had with them. but they've worked honestly and
11:16 am
openly with us. first thing they brought up are the issues in mexico. they've taken the matter rather seriously. i'm sure we will have more questions about that. they are work closely with the city. >> what was their -- in that meeting with that representative, did they give you any sense as to how they would defend that situation, mexico in the last few months? >> it's a major news story. they were up front that they are taking it seriously and it's not a reflection on their company. we're excited to learn more about walmart and more about neighborhood market. having access to quality, good, wholesome and fresh food and produce in the urban core is something we strive for and the concept is something that we're really intrigued with and to learn from the world's largest retailer about this approach is something that we're really excited about. but, you know, we also have -- will have questions like we would with any potential community and business partner as to what these allegations
11:17 am
mean. >> you know, everybody in the markets, everybody has invested in the stock. has one question. and that is, does the situation in mexico, whether it's proven or not, will it impact their growth? will it impact growth overseas? will it even impact gross domestically? you're in a situation where you're considering -- you're in a position to alter or effect that potential growth. is your worry about walmart, even on the margin, has it been worsened because of what the "times" said over the weekend? >> like anyone, i'm curious. but our decision locally is based solely on, is the use allowed and has it reconciled against the zoning on any conditions put on any potential permitting? we like to take a thoughtful approach to any potential business partner, especially in this walmart case. they have been very upfront. they have recognized the concerns that different groups have about them, whether they are legitimate or not.
11:18 am
they have done their due diligence. they recognize the conditions that they have on -- we like to see on the building and the design. but we can't make decision based on what happened in mexico. that's not what the law allows. planning staff will make a recommendation to the special permit granting authority and if any permit applicant meets those conditions under the law, it's within the discretion of the special permit granting authority to grant the permit or not, not based on any of these allegations. but like anyone else, i will ask those questions further and i'm sure walmart will address them thoroughly. >> well put. mr. mayor, appreciate your time. >> thank you for having me. >> meantime, walmart facing massive opposition to a supermarket in san diego. yesterday community members appeared before a superior court judge seeking a restraining order. the judge ruled that walmart can proceed with that project. juan vargas represents sherman
11:19 am
heights. good to have you with us this morning. >> thank you. >> you're a much more vocal critic than the mayor appears to be. how much did the news over the weekend, the allegations over mexico change your point of you? >> it didn't change it. it just confirmed it. this is a company that comes in and rips the community apart. anything that they do overseas doesn't surprise me. that they were bribing people in mexico, that doesn't surprise me at all. they kind of parachuted into this community. anything that they would do does not surprise me at all. they will do anything to get ahead. >> some would argue obviously doing business in mexico is different than doing business in this country. and there are ways lots of companies legitimately use help fixers to accelerate different processes when it comes to growth and then there's the whole argument about bringing jobs and low prices to consumers. >> yeah. but we also have our rules and laws in this country. for example, you can't go to some country as we do. we see these doctors and others
11:20 am
going to taiwan and abusing children. and saying, that's okay, but we are a country of laws and we should abide by them. whether we are americans doing business in mexico or somewhere else, we should uphold the rule of law. so this notion, well, it's okay. walmart was doing what is typical, we also have beheadings in mexico. is that what walmart is going to do next? >> some would argue, whatever they do right or wrong, has little to do with how they operate in sherman heights. >> i don't think that at all. what you see there is something that you see across the whole company. this is a company that is very aggressive. it does do things like cutting corners. they are doing that in sherman heights. they know that we're also building the community and it's building a facility very close to them. they know that they are coming in dark at night and trying to get there first. they do this all the time. anything that they do does not surprise me. i lived in somerville also.
11:21 am
they better watch out because they don't know what they are going to get. >> you mean from justice? >> no, i don't think -- i think that walmart, if it goes into somerville, the mayor and others are going to be sorry that they let them in. i lived in somerville for a while. i went to harvard law school. watch out, mayor, you you're going to get more than you bargain for. >> the allegations are going to bolster your case. however, we'll see how the investigation turns out. senator vargas, thanks so much. >> thank you. i appreciate it. markets are in rally mode. we'll talk about more about what is leading the charts. also, james murdoch taking the stand today facing tough changes about media ethics. what he has to say about the phone hacking scandal and we'll count you down to the close in europe. eight minutes and 20 seconds away. away. [ male announcer ] when a major hospital
11:22 am
wanted to provide better employee benefits while balancing the company's bottom line, their very first word was... [ to the tune of "lullaby and good night" ] ♪ af-lac ♪ aflac [ male announcer ] find out more at... [ duck ] aflac! [ male announcer ] ...forbusiness.com. [ yawning sound ] [ male announcer ] ...forbusiness.com. according to the signs, ford is having some sort of big tire event. i just want to confirm a few things with fiona. how would you describe the event? it's big. no,i mean in terms of savings how would you sum it up? big in your own words, with respect to selection, what would you say? big okay, let's talk rebates mike, they're big they're big
11:23 am
get $100 rebate, plus the low price tire guarantee during the big tire event. so, in other words, we can agree that ford's tire event is a good size? big big ♪
11:24 am
[ laughter ] ♪ [ female announcer ] each one of us is our own boss. ♪ and no matter where you are in life, ask your financial professional how lincoln financial can help you take charge of your future. ♪
11:25 am
kayla tausche is live in london. good morning to you. what's the latest? >> reporter: good morning. the hearing has just wrapped and we expect james murdoch to make his way out shortly. the detail is key to the hearings this week as it allows the commission to focus outside phone hacking and on the seemingly cozy relationship that they have had with the politicians in the uk the inquiry has been ongoing for more than five months with more than a dozen members grilling james murdoch based on the testimony that they've heard thus far. he testified that he had did not appoint executives and editors with political leanings in mind. but the second half of the day
11:26 am
concerned the companies dealings with governments and whether they communicated illegally during that review. now, ironically, carl, the shift of the onus is probably a good thing as you can see from news corp. shares today and fielding most of that blame right now is secretary of state for culture media and state jeremy hunt. the inquiry source more than 100 e-mails between hunt, michelle, and murdoch, most showing that they were communicating privately and one even joking that the communication was illegal. murdoch said that the feedback was normal and he didn't do anything inappropriately. take a listen. >> there is absolutely not a quid pro quo for that support and the decision making around the sun's policy and who they support. the lengthy negotiation and
11:27 am
regulatory process to the sky transaction was entirely separate. i simply wouldn't make that trade. it would be inappropriate to do so. and i just don't do business that way. >> now, additional dealings with scottish politician was also mentioned but cut short because there was too much material. no doubt any additional questions could be fielded tomorrow and thursday by rupert murdoch. carl? >> kayla tausche covering the news corp. story in london. time for a break. don't go away.
11:28 am
[ 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. how did the nba become the hottest league on the planet?l? 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 built by the only company that could. cisco.
11:29 am
11:30 am
the european markets are closing now. >> and as you can see, it's a sea of green. all major stock markets in positive territory. you can see right in the south of the mediterranean, let me show you what happened during the course of the session. because a lot of that has to do with the fact that we've rallied so strongly here on wall street. this is where we are see how they have rallied also france and it's really here as wall street opens that they get another leg up, just compounding a risk on day if you'd like. spain up 2 and a quarter percent a good day for those investing in the market and as you jump through the hoops of a sovereign debt auction and one over in
11:31 am
spain. theats meant that we've got a bit of a rally. these are prices here at the end. the price of spanish, italian paper has risen. the yields, therefore, have fallen on spanish debt. below 6%. the dutch clearly still has a problem with the break-up of that coalition to recognize the context that we're getting these days up and days down. let me show you the last month where we are trading on the dow jones industrial average and the top 50 blue chips within europe calling for the dow jones euro stock 50. there is a stark contrast. the breakdownen its continues ie europe. as you get lower lows and lower highs coming through. be aware, as you look past through the daily moves. the european situation is deteriorating. perhaps it's a forecast over the
11:32 am
next 18 months. let me point out the stocks to you. they are big movers in europe today. the french asset manager is up. italian car maker has gained 4%. check out the three stocks over the past month and you will see the point that i am trying to make here. they are down 16, 14%, 28% during the course of the last month. so when you see bid rises in the european markets, bear in mind some of them, though not all are coming off really deteriorating. >> you should do more of that. >> makes you wonder if they are going to converge, if they have to converge, if they can exist separately. >> how many american asset
11:33 am
managers have said, i favor u.s. equities? we will break away? and that is exactly what that chart shows over the last month. there is a decoupling. >> thank you, simon hobbs. let's go to sharon epperson. >> we are seeing a coupling in crude prices as well. that is seen by many as more of an international benchmark for crude prices. we are looking through prices that have whether it will stay above the 100 day moving average. 116.60. in terms of what we're seeing in wti crude prices, more reflective of what we have here. that sin flunsed by what we see with the dollar moves and traders still say that they are anticipating or trying to figure out what the fed will do and
11:34 am
they are definitely on fed watch. saying that the fed may stay on the side lines and as they see more signs of recovery, perhaps oil traders will do the same until they've determined what the fed may likely do. the other key commodity to watch is gasoline. we've seen gases fall considerably. several refineries are undergoing some types of negotiations and they have been thought to be idled soon or shutting down soon that may have more life in them. there have been talks about conocophillips and delta perhaps doing a deal for the trainer refinery along the east coast as well. all of those factors may have an impact in the gasoline market.
11:35 am
back to you. >> sharon epperson, thank you. let's bring in bob pisani. >> there are two things that matter they are really important and they came in and raised the guidance range. united technology, that company affirmed the 2012 sales outlook. these are the big, big names to watch. what's the result of all of this? remember, a month ago the panic that occurred? it will get better there. the panic that occurred with 1% growth. everyone said, we can't have 1%.
11:36 am
every single day of earning season it's going up. now look at it. that's not right. 4.9%. that's what you want to look for nearly 5% in growth for the first quarter. that's happening every single day. let's talk about some other things. how about what else is going on here with the s&p 500. remember how we were moving down going into earning season? notice how things have changed a little bit. it's stabilized in the last week or so after alcoa had its earnings come out. i want to talk about new home sales. stronger than expected for march but most importantly there was an upward revision. that's good and bad news. everybody is happy about it. take a look at this. month over month, the numbers are down and all of the major groups that i watch, new home
11:37 am
sales down 3%. housing starts down 6%. now, this is month over month. not year over year. year over year we're getting improvement. my point here is that this is why people are concerned that the numbers may be a little bit -- we may have gotten ahead of ourselves, that the housing numbers are not quite showing the sense of robustness and moving forward, month over month growth that some of the traders expected. finally, one last gripe. what's going on with housing prices? i don't understand this. we've got two sets of housing prices. the fhaa puts out one and case schiller puts out one. one says it's up, the other says it's down. carl, something is wrong here. the fhfa sponsors the whole united states. case-shiller is only 20 cities. >> it's been so warm.
11:38 am
doesn't that explain what new homes has done over the last couple of months? >> yes. i think we have pulled numbers forward. i would have hoped to see more sequential growth march over february. >> thanks a lot, bob. moving away from europe, the federal housing finance agency is under pressure to help struggling homeowners. obviously it will raise the cost of credit. rick joins us with a special guest in the santelli exchange and that is senator bob corker. rick? >> well, welcome senator corker. i'm glad to have you. especially con ring that you sit on a committee that really is going to continue to monitor and look at the fhfa. and my first question to you is, ed demarco, what is his legal role? >> his role is to preserve tax payer assets, to make sure that taxpayer money is not wasted and he's done a good job of that as
11:39 am
the conservator. he's not running the organizations. he's trying to conserve taxpayer resources. >> all right. there was a lot of pressure on him. there's a lot of democrats trying to pressure him to do some of these debt forgiveness programs. if they want him to do something like that, they need to procure him some money. and you know what their answer was, you probably do and there's probably extra t.a.r.p. money. >> first of all, i think the first lesson with this is, rick, you should never let the federal government, federal officials control organizations like fannie and freddie. the first thing is, organizations like this should not exist for officials to use them as play things. that's what is happening. the treasury is in way over their head.
11:40 am
they've got about $20 billion that in essence is burning a hole in their pocket. it's left-over t.a.r.p. money. instead, what they are doing is basically forcing ed into a box. he's already shown, if you do principal reductions within fhfa, it's going to cost the taxpayers money. nine out of ten are makes payments. three out of four underwater are making payments on time like americans do. so he's shown that if we try to do principal reductions, it's going to create a moral hazard where people will begin to do what is called strategic defaults. if the government is going to reduce my principal, i'll stop making payments and have lesser of a mortgage. so he calculated that this moral hazard was going to cost the taxpayers money. so treasury said, well, maybe it will but we're going to take money out of another pot. it's taxpayer money, obviously. we're going to take it out of
11:41 am
another pot and give you $20 billion. therefore, as the conservator, you cannot say that within these organizations you're doing something that is costing the taxpayer money. this is the kind of thing, rick, that we've seen going on all over and over and over and it's going to lead us to a place that we do not want to be. i think it's reprehensible and if he's forced to do this, le do it in a way that does not create moral hazard. >> i agree. the president is on his screen tour and i see a lot of similarities with what is going on with the student loan program and the government being in control of those programs via sallie mae. if you want to get elected, you have to give something away because the tough love solutions don't give you necessarily a lot of electoral positives but they are solutions versus throwing money at a problem. >> yeah, i think without being
11:42 am
specific on the student loan issue which we're delving into in detail right now, i would say that what we have right now is a vision of two americas. one is that you can have your cake and eat it, too. we can continue to go down this path of politicians giving citizens what they wish with other taxpayer money in order to make themselves popular or we can do those things that we all know have to be done for this nation to be made great. we're watching the movie play out right now in europe. when that was not adhered to, we know that that's not the path for our country. the treasury department, during this election year, has obviously forced money out, doing things that we know probably are not going to be in our country's best interests or i would say i know are not in our country's best interests and i just would hate to see this playing out. we're continuing to move our society in a direction that to me is not the place we want to go and the government isn't sending that to happen.
11:43 am
>> well, senator, i appreciate you coming on today. i know you have another hearing about mf global and maybe after that hearing you'll come back later in the week because many traders would like to see some action in that regard as well. thank you. carl, would you like to talk to the senator in. >> i just want to say hi. thank you very much for joining us. thanks to you, rick, as well. straight ahead, apple continues to fall down more than 7% over the last week alone. will the pullback bring a broader tech? first, the losers ending now. >> announcer: we're going back to goldman, goldman, goldman sachs, that is. join us for exclusive access to their asset management team, including jim o'neil, jonathan and much more, that's tomorrow on "squawk on the street."
11:44 am
and she's looking directly at your new lumia, thank you at&t. first, why don't you show her the curved edge... now move on to the slick navigation tiles -- bam, right into the people hub. see megan, colin has lots of friends. hey, colin, what kind of phone is that? whaaa -- oh megan -- when did you get here? [ clears throat ] ohh yea no, let's... [ male announcer ] introducing the beautifully different nokia lumia 900. only from at&t. rethink possible. .
11:45 am
let's start with car insurance x.
11:46 am
this one does save people a lot of money and it's very affordable. it was very delicious. could you please taste car insurance y? this one is much more expensive. ugh. it's really bad. let's see what you picked. oh, geico! over their competitor. you are a magician right? no., oh. you're not?, no., oh, well, give it a shot. i am so, so sorry. it was this close. welcome back. cominging up at the top of the hour, whitney is buying more and he's calling in to tell you why. plus, the street and linkedin be the stock to own? now back to carl down at the exchange. >> see you in a few minutes, scott. apple is down from the closing
11:47 am
peak but remains the word's most valuable company as the company prepares to report results tonight, there are some reports that may miss targets on the iphone. so what exactly makes apple apple? and what must it do to continue to be apple? denn dennis be are rman, everyone is acting like the future of the free world is riding on these results tonight. is it that big of an economic force or is this getting ridiculous? >> i would say it forces the power of belief, that apple is infallible, unstoppable, and taking over the globe. and even if it misses the i pip numbers come in low, the growth in the u.s., the activation is coming down. so many people are rioting in the streets for apple's products. so in my mind, the belief, the
11:48 am
cult remains in tact. >> so we give them the benefit of the doubt once? >> yes. and i would say probably twice more. >> more than most companies tend to get, paul? >> yeah. i mean, look, the stock is taking a huge hit the last few weeks or whatever. why? there's been no fundamental reasons. it's been going down because it went up maybe too fast or went up fast enough because people started looking for reasons. will they miss the number in phone activations? will this happen? will that happen? whether they sell 30 million iphones, you know, as was just mentioned. it's like they have a whole world of people moving from feature phones to iphones and apple is going to dominate that. >> i would add to that, there are pressures that are coming to bear on apple. we may not see them this quarter or next quarter, but people really have to focus on what the verizon executives said in their
11:49 am
conference call. they feel almost too dependent on apple. over half of verizons phone sales, it's almost three-quarters for at&t. to be so dependent on one product is a very bad place to be. that's why at verizon, their key to developing the windows operating system which i don't think will go anywhere, they are going to push back to apple. that's where i think the pressure is in the long term. >> paul, a lot of people are trying to build the bear case, saying, look, what if the carriers actually do grow a pair, right? what if they get a spine and push back against the supplier of theirs and then on a lark, what if this turns out to be something? >> i mean, fine. they will take a hit. the margins will narrow and it will be a pain and bad for apple and the iphone 5 will come out and the hype will move again. the absolute numbers are there. they can still take a little bit
11:50 am
of a hit on margins if the absolute numbers grow enough, no? >> well, carl, i kind of find it remarkable how long apple has been able to maintain it's margin and market share. the market cap is a third of apple at 560 billion. there's no way, right, over the long time -- maybe in the short time it can but there's no way that that market position can sustain itself, at least domestically. >> no. competing against itself. finally, paul -- >> apple is going to stumble at some point. apple has one giant long-term issue and that's product road map. we still haven't seen what ne devices will come out without steve jobs. >> and that brings me to my last point and that is, bears on the stock point out the same names. xerox, polaroid, i'm trying to remember some of the others. it's the nifty fifty. has the company learned from that? in a post jobs era, this v they
11:51 am
built in some assurance against it? >> i can't imagine. they are working the way they always have, which is real focus in delighting their customer in the spirit of steve jobs but steve jobs is not there anymore and we just don't know what tim cook can do. we don't know what the apple tv will look like if it comes out and what products will emerge. there are still riding projects that have come out under steve jobs. it's a big unknown. >> i would say there's an insurance policy, called $100 billion. >> in cash. >> if they have to, they can go out and buy something, although that's certainly not something in their country. >> like a small country. it just seems inevitable to me that the market will work its magic and apple will lose some of its position. android has its own issues right now. microsoft, blackberry are basically off the playing field, as we speak. but it will be something and that's the cycle of life and the best companies react and so far
11:52 am
apple had a near death experience in the '80s and '90s and somehow they got it back. long term, we all die. it will happen to apple. but maybe not in the dur rags of the next few quarters. >> the circle of life. cue the lion king music. i love it. when we come back after a break, markets holding on to their gains today. market is stuck right at that # 105 level. why you may want to think twice about talking on a phone. you've got to see this video. >> announcer: it's viewer's choice on "squawk on the street." tweet us a stock you want to know more about and why it interests you. send your requests to cnbcsquawkst with post 9.
11:53 am
it's the investor club. keep watching. yours could be next. how math and science kind of makes the world work. in high school, i had a physics teacher by the name of mr. davies. he made physics more than theoretical, he made it real for me. we built a guitar, we did things with electronics and mother boards. that's where the interest in engineering came from. so now, as an engineer, i have a career that speaks to that passion. thank you, mr. davies.
11:54 am
11:55 am
walking and talking on the telephone proved to be dangerous for a chinese girl. she did not notice the caution signs on walks directly into a sinkhole zone. she fell 20 feet straight down. a cab driver passing by saw her fall and then he fell into the
11:56 am
hole himself. they were both trapped until firefighters rescued them. both of them are doing fine after the fall. the lesson is, watch where you are going. google's larry page and eric schmisha smith, what are they looking for? some of your responses after this break. this break. for a hot dog cart. my mother said, "well, maybe we ought to buy this hot dog cart and set it up someplace."
11:57 am
so my parents went to bank of america. they met with the branch manager and they said, "look, we've got this little hot dog cart, and it's on a really good corner. let's see if we can buy the property." and the branch manager said, "all right, i will take a chance with the two of you." and we've been loyal to bank of america for the last 71 years. monarch of marketing analysis. with the ability to improve roi through seo all by cob. and you...rent from national. because only national lets you choose any car in the aisle... and go. you can even take a full-size or above, and still pay the mid-size price. i'm going b-i-g. [ male announcer ] good choice business pro. good choice. go national. go like a pro.
11:58 am
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. ♪ ♪
11:59 am
film maker james cameron and larry page and eric schmidt are investing in planetery resources with plans to send unmanned craft to mine for gold. what are they looking for? page is looking for a summer home, schmidt is looking for a better job and cameron is looking for a talent that he never had. and another tweet, i believe they are looking for commonsense. and obviously looking for super powers, rich nerds. one reminder about tomorrow as we talk about markets, the fed. the

217 Views

info Stream Only

Uploaded by TV Archive on