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tv   Squawk on the Street  CNBC  May 2, 2012 9:00am-12:00pm EDT

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>> neil, i want to thank you very much for joining me. you look great in this car, becky. you should get this car. >> this video is going to be used instead of antioccupy wall street videos. >> that's right. >> show everybody newport beach has one of these anyway, don't they? >> well, i'm jealous. i don't know about you two. good morning, this is "squawk on the street' live at the big board, jim cramer is off this week. take a look at futures. jim cramer is going to give back a lot of what we got yesterday. almost all of it after some pretty miserable adp numbers. also in europe today, some pmi
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numbers that show weakness, once again, in spain, in italy, in grease, in germany and in france. >> and if only we had ferarris that navigate today's turns, the numbers call into yesterday's ism rally, is it risk on or risk off? >> it just got a lot worse. a $200 million chest fund. is there anything the company can say in today's conference call? >> the road show starts on monday. it marks up with a reportedly world ten of some of these meetings. and david einhorn, smoke some herb. why are analysts coming to the company's defense this morning? >> we have to start off with the markets. adp data coming in much weaker than expects this morning.
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private sector employment increase with losses in the manufacturing and goods producing sectors, specially manufacturing is a loss of 5,000 jobs. that seems to look at some of the positive manufacturing data that we have seen, particularly yesterday's isn number. but this comes ahead of the big job support. you know, the weather seems to figure into so many of these in the economy. did it also have an impact or potentially have an impact here? >> tough to tell. we're paying now for the good results during the warm winter. services may not -- all of the private sector growth in adp. it feels all services, goods lost 4,000. manufacturing lost 5,000. so it's almost the inverse of what the ism told us yesterday, which is maybe a fifth.
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>> the four-year highs yesterday, just about 6% of its all-time high, set october, 2007. so what can we say for this month especially after we came off the very tough month of april. >> yes, a very nice beginning to the movrnt of may. we should also point out the ten-year bond. it's at about 1.9%. it's not that long a go that that price was falling drastically and we were going to be 2, 3, 2, 4. we're back well below that. >> yeah, we had that average just a couple days ago. that generational call about saying good-bye to bonds and hello to stocks. we're not talking about what happens between now and next tuesday. there was a gun lock on this very set. there's another trade in treasuries. in fact, they're back to the lowest in february. >> they are. of course, a year ahg, we had
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the same conversation and we watched the ten-year trade to yields. never saw it. >> some more drama over at chesapeake, as well. the ener ge company did miss expectations last night. shares sharply lower in the market. now, there's reports that there was a $200 million hedge funds behind the scenes. the company started a few moments ago and we're going to get you any headlines as they become available. but the picture, david here, are broadening. >> yeah, i mean, i know our own kate kelly has been following the story. she'll probably join us, i believe. and i may make some calls, as well. the question here is clearly the board had very little control. the board has now been taking control. he's going to give up the chairman's title. they're going to give him
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nonexecutive. he will be ending 18 months early for which he's getting no compensation. the stock was up yesterday. then we got a bad number. i also threw in the fact that carl icon has been giving shares. a lot of different things to discover when you consider the number two natural gas producer in this country. >> and some of the guidance for the last years? >> and the thing about production cuts is that they're cutting primarily gas liquids that plead into chemicals. it's the production of natural gas that largely remain the same. also, with sub three dollar gasoline, the question is how much liquidity can they cut production back enough in order to preserve their liquidity if gas prices remain near these decade lows. what is the most troubling about this is the potential comment
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about this. it's the hedge fund that he allegedly helped to run. >> this is the point of reuters, absolutely. but he apparently got it cut of the fees as well as the profits of this hedge fund. and they're in the same markets that chesapeake operates in. did he have any information? >> i mean, listen. he's a charismatic figure. that's one reason why we talked about him so much. you have to be to do what he did. he built a company up from nothing. but he's gone his own way. now you've got a board feeling a little bit more empowered. clearly coming out sharply and saying you've got to try to take control. i don't know about this hedge fund story, we will see. but it's potentially troubling. >> true. just the production stuff that you were just talking about, melissa. they can't shut drilling and
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production fast navarre. >> exactly. so we have a story where the ceos ethics, corporate govern nance is in question and the fundamentals of the business are in question. there's about 9% of the fer market session. so meantime, it is the ipo that wall street is waiting for. and the road show is what we're talking about. the networking giant is nearly near completion and could hit the road to top the potential investors starting next week. the road show is expected to make stops in new york, boston, chicago. mark zuckerburg is expected to appear at some of them, at least. >> yes.
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. >> apparently, you get some metrics, something that facebook is not as willing to do. as claimer said, a lot is riding on whether or not a p&g or somebody like that is going to make the plunge or change that model for good. it's so initial. some of them already own shares because let's not forget, there was a very active secondary market in this stock even before or in this company before it has come public. you can view it in a social utility. but kind of like 900 people like water. they'll be playing close attention. >> so we want sooner than we thought, right? we heard early may an then maybe june. and it is a week from monday?
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>> his attention was otherwise focused on things like instagram. will it be 85 billion, will it be 75 billion? with that growth rate slowing sequentially, even though it does seasonably, it's still a question mark as to whether they could really get to that hundred level. it seems unlikely. >> youtube announcing a new programming deal. jewel yon is here with more on that and what it means for fans. >> good morning to you, carl. new youtube channels as part of its brand cast of advertising presentation. the company is stepping up its ah ringal content to draw big brand advertisers as it becomes more like a series of cable channels. youtube is launching a team usa channel from the u.s. olympic committee sponsored by at&t and
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some historical footage. youtube is announcing channels about women and as well as a channel from tribecca enterprises. plus, a new action series about video game, halo iv. by the end of july, there will be 25 hours of new, original content on youtube every single day. submitting that they spend more time streaming video than watching it have and that one-third of that demographic visits youtube multiple times a day. now, carl, these announcements are all mart of google's push to make it a premium destination. >> interesting, julia. and we're getting some headlines regarding david. i don't know if you see this or not, the dispute between yahoo and lobe. >> we're in an annual meeting
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season in which they said they tried to, that is yahoo management, making a case to their own directors, that they tried to work with third point. they had offered two seats. a lot of this we already knew. they declined the pro-q sis. they say their nominee was superior to the third point. again, we were aware of this. the question is how many below is it? our thanks to julia for some of that yahoo news. the shares yesterday held as much as 24% after some controversial comments by david einhorn. greenburg has been following this story since it broke. >> herb? >> let's explain what her ball life is. it's the biggest publicly traded
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company of nutritional supplements. my research shows that mlm companies are really in the business to recruit people to sell their products. after the stock debilityed yesterday, they issued a response. but let's take a look at what the company said. first, her ball life said their questions are elementary and had been thoroughly addressed before, in which i say, so, these are important questions and the answers are complex. i see way too many companies in the past try to push off critics by saying this is old stuff. the company also said its fundamentals are very strong. and i say yes, the fundamentals look strong. in this, in a supplement, her ball life responded to einhorn's question about outside customers outside of her ball life's
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network. we don't track that number and do not believe it is relevant to the business or investors to which i say, in all mv research, and i have done a ton on this company in the industry, that may be the most relevant number. i have to tell you, some analysts are saying the sec cleared this thing. >> there in lies a really big part of the story. >> so, basically, the question is how much is distributed to those distributors and then the nextwork who buy the product at a discount and then ends up in the hands of the customer snuz. >> that is a question. every time analysts asked about it, they say we don't know. and as you can see here, they say it's not a relevant number. what i always find interesting here, and i messed this on air, but i think it's relevant.
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the driblt tors have to certify that they sell products to at least 10 customers a month, right? but the company says it's 10 k. it can't verify that information. so you've got just a lot of clouds here. and i want to emphasize that the sec regular lilts these guys. it's going to be intercasteing to see where they come back on this issue. >> and it's interesting to see how many other mlm companies are falling on the news. you said you've done research on many of these companies. are they also posed to these companies? oh, absolutely. i'd say one of the most controversial out there is news skin. and i would say colorful companies in the industry. >> all right, herb, thanks a lot for that update. i want to get back to kate kelly. she's got some headlines, kate? >> thanks so much, melissa. that conference call just got under way at about 9:00. and currently still chairman about all the issues of the
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pinkest few weeks just to remind viewers, well participation program where they took out some loans. also, news this morning from reuters that we've confirmed was running a hedge fund alongside of his role as ceo for the company for at least four years in the 2000s. here's what aubrey had to say. let me begin with everyone is clearly aware of. there's been a scrutiny of our company. your mother told you not to believe everything you read or hear for good reason, and that's certainly been if case. i am deep le sorry for all the distractions. he talked about disclosing more information to the founders which he will not receive any benefits for when it terminates. i also want to note he didn't talk about the hedge fund specifically, but i have been toilets that they tended to be always long natural gas where as the company would be short because of its hedging needs.
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and that trading, in fact, according to this person, helped inform mcclendon's work through which the company made about $8.4 billion since 2006. so, obviously, an every to turn this story around. the stock was down more than 9% and there's been a lot of heavy scrutiny. kate, we're about 16 minutings in conference call. are we at q&action? >> i don't know. i think they had some financials to go through. i'm not aware that we're at q&a yet. we'll keep you post does. >> coming up later this morning, bank of america is here with views on the markets and how you should be playing all the action. later on today, seniors holding its annual shareholder meeting today with a rare appearance. we'll see what the future holds for that retailer. one more look at the dow futures as they're on the back of a 52. a lot more squawk on the street
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stocks finished at a four-year high. if you had bought into the market even six months ago, you'd be looking at a substantial profit. if you would have invested $10,000 in the dow, you'd have $11,200 today. how about some discretionary stocks? 10 k at home depot.
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disney, a $3,000 profit. a $10,000 investment in garman would put $3900. this is all, of course, without dividends. for those of you who had 10 k and are interested in reliving the past, some of the gains you might have had. not too shabby given all the uncertainty. >> yes, especially the first quarter of this year. >> yeah, it is interest qh. meanwhile, we don't have retail investors back in this market. we're talking about $10,000 lying around, we still have it lying around. >> people have it in the bank or under the mattress or in a bond fund. >> all right, coming up next, it has been a rough year already. is a blackberry 10 too little
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♪ la la la [ man ] whoops, forgot one... [ male announcer ] sustainable solutions. fedex. solutions that matter. >> >> let's bring in our cash and floor director. great to see you. we got all giddy about the manufacturing data and then we got the job losses, specifically, in manufacturing. which one trumps? which whoop wins? >> i think i'm going to be a
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little more concerned. >> secondarily, we had the sand box all to ourselves. as much as there's a concern, it's about europe and euro problems. pmis over there were dreadful. >> it almost feels like the more negative we are, the better sed up we have in terms of racz etting down expectations. i think that's probably true. but i think i told you guys in the beginning of the week, my concern is the worst of all worlds. that would be a lousy payroll report and a drop in unemployment which would leave the feds with bad news and in an election year, not being able to react. >> you always bring up europe. it seems to come and go. but it's been a consistent concern of yours. >> absolutely. and my true concern is if they keep pushing on that austerity button, i think we may wind up seeing unrest in the streets.
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>> i think they had the biggest of intentions. but when you have over 50% unemployed in the youth area and summer is coming, it's going to be hot, nothing to do in the streets. it could be trouble. >> elections to get through. the rest of the week could be turbulent. if we stilt don't know what's going to happen in paris over the weekend. >> no, absolutely not. well, you also have a debate there tonight. now, sarcosi is much the better debater. but history, such limited history as we have schillings indicates that the debate does not usually influence the run off. >> all right, art, last question. how do we trade today? we finish lower? >> i think you've got to be cautious.
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i think you've got a lot of head winds here. >> speaking of which, opening bell about four minutes away. "squawk on the streets back in a moment. ment.
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>> shaping up for some moderate weakness here this morning. if you're just tuning in, the adp number was not so hot. the estimate 171. 5. it's the lowest since september of last year. even though the six-month average is right around 200 k, it's forcing some down about the labor market in this country. >>. >> and already, traders are expecting very light market and they're expecting a big move, although up or down is anybody's question. you don't know if that's good for the markts and good is bad.
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>> severe in those countries. there's the opening bell over at the big boy here. phillip 66 celebrating its spin off. we're going to talk to the ceo of phillips in just a moment. they just sold that refinery to delta airlines. the low income families. so there's going to be a lot to watch. favorites going to have a lot of media companies, including comcast, cbs last night. >> trip advisor had a huge path. it is up 19%. this is an all-time high, better than expected first-courteder earnings.
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the comparison was missing in the revenue. nice turn around there. remember what happened after the back of expaid yeah? also an outside stop that we're seeing play out once again for shares of a trip advisor. cbs will talk on that at a 52-week high. >> just briefly, revenue up 18% for comcast. if you take out superbowl, still up 18%. so good numbers out of comcast last night. american eagle raising their guidance from 20 cent to 18. estimates 107. one of those retailers that see some things for the rest of the year. i think aeo is going to have a nice day, almost 9%. >> also seeing a pop in today's
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session which is largely filled with red arrows. up by 1.5% to start its project. so this is widely anticipated and they're getting another pop on the back of the official wind shares at 1.7% right now. >> from wind to rim, of course, the big developer's conference with research in motion. of course, the ceo giving the new blackberry ten to a select group of developers trying to create some buzz. the talk, though, this morning, is they're doing away with the keyboard which is the only reason you would have a blackberry. >> that's why i chose to have one. otherwise, i wold have gotten a keyboard. i tried the touch screen on the torch and it did not like it.
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the problem with releasing it early, it dented create buzz, it created buzz kill. we spoke to boy gene use report yesterday. and he said it's dead. this thing is the nail on the coffin. >> yeah, we've had economists basically say it's a cash flow watch at this point for that company. by the way, speaking of sectors at large banks, a lot of the heads of u.s. banks in this city, new york, a meeting with the governor today. they're going to talk about the stress test, some of these proposed counter party limits, proposed capital requirements. and what is weighing very heavily is the trading that we saw yesterday in large part was closed because of may day. we are seeing spanish banks trade for the first time since last week. we're seeing a 6% decline there.
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and, in turn, we're seeing a 1.5% decline in the like of morgan stanley which has been two stocks who have largely taken their skews in spain for whether or not that's valid or not valid. that is the trading power that we have seen. we are seeing some heavy pressure here. >> david and bob are on the floor. what's going on, guys? >> as usual, we turned for some insight on europe, which we haven't stalked about that in the first half hour. >> our futures were weak out throughout the overnight. the on pmi numbers came in. we all know spain is in contraction. we all know italy is in contraction. but germany is, too. jeremy is below 50. germany came out the lowest since july of 2009. >> one expects that's going to be exported in there. >> these are exportations.
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these are people's opinions of how business conditions are, just like our ism is here. and the germans are getting more pessimistic. >> that's the bot tom line. spain's index is down again. the ibex is the lowest since october, 2007. i think they've been down 2% every day for the last three days. it's the german numbers that are getting people talking. that's why you're seeing europe so weak. i don't know what to say about the adp numbers. how do you explain yesterday the ism says manufacturing employment numbers were optimistic, expecting to hire more people, we're hiring more people. adp comes out today, 85,000 jobs lost. >> we've been talking about it, as well. >> nobody on the street, the traders, they're not sure what to do. they just throw up their hands. >> well, we'll wait until friday. >> right. so there's some disconnect.
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earnings were 70% through the first quarter and the earning are good. right now. and 70% for the s&p 500, 6.9% earnings quote. we were, one per crenelate. now we're at almost 7%. that's certainly very good numbers. a lot better than some people were expecting. 69 pr 69% of the companies reporting had to eat so far. that is well above the historical norm. it's normally about 60%. the numbers are looking good. i like conway. the transport company. they reported very good numbers overnight. the tonnage grew, the amount that they shipped grew. but the prices were up. they were able to raise prices. and because the win winter was pretty mild, they operated pretty efficiently. so here's a number that is decent.
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so before everybody says oh, the reason the dow is up is because of qe 3 prowess pectases, i won't deny its interest. but earnings are holding up. we have heard europe and china and brazil. >> that's a very good example. there's a company that works all over the world. they very clearly stated we're doing well. but europe is a problem. and china was not quite as strong as they anticipated. and, by the way, the official numbers came in pretty good, yes. >> so they've got some good things, so bad thujas, some things to worry about. back to you, guys. >> okay, he's going to check now with cima. >> good morning, melisa. adding pressure to tech stocks which were a bright spot yesterday. on the back of that, manufact e manufacturing data. some of these tech names giving back some of the games that we saw. the stocks also out performed in
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yesterday's trade. but take a look trading lower today. this is one of apple's component suppliers. beaten the street by 10 cent, but broadcome said it would cut into margins. that's why that stock is trading down. speaking of chip stocks, standard microsystems at a 41% premium and it moved to expand its product offering the deal. it should close in the third quarter. it's better than 38%. definitely seeing some notable moves there. lastly, a quick look at casino stocks. a particular win to develop a 51 acre site. this will, of course, help the campanili gain exposure to the gambling hot spot of asia. guys, back over to you. >> over at the nasse doc, i want to shift the bonds to the dollar.
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our cme group in chicago. good morning, wreck. >> good morning. buckle up. we're going to go fast. adp the lowest level in 7 months. and the aftermath. our tenure doing another beline towards the 1 t90 yield. no closes recently. if you look at the boom approaching 160, we're up there looking for dollar index, it's benefitting from the anxieties in europe. let's go through those real quickly. this is important. if you look at italy, there was some stocks that were halted. they had unemployment at a 12-year high. if you look at arizona as a region, 15-year high in terms of unemployment. the treasury announced they may refund. why? it's 72 billion. we do that almost every other week. but the interesting part is in the sub text, they say floating
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rate notes which means they may issue. they're not going to come with it right away. why would the investor issue notes? they could be nervous about fixed rates. david, back to you. >> all right, thank you very much, rick. we've had a slew of earnings reports over the last 24 hours from some of our bigger media companies, which tends to be an area that i like to report in and play in. let's get to them, shall we? let's start off with comcast. the parent of our network, always should point out, why is that stock down. we'll take a look at the run that that stock has had. there's perhaps a little bit of a euphoria or an expectation that it would be a bit better. the earnings numbers quite good. a bull case for perhaps an addition of video subscribers. they lost 37, 000. now those numbers are coming down. but, given the run up in the stowing price, there had been
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expectations and customers would actually grow 22.29 million. you see it right there up 7.8%. >> numbers across the board, pretty good. the broad band editions quite good. margins seem to surprise people a little bit. >> maybe it's just becoming a commodity. in our cable kneltworks, while it was up, may not have been up quite as much as some had been anticipating. so, again, let's call it a good quarter. but giving that move up in the stock price, some will say all right, we'll take a pass for now. let's move onto time warner. that stock down ever so slightly. looked okay across the board. again, not long ago, the company went on a road trip and said why is their stock down? they've done a lot of buying bankrupt stock. but the beat here was the studio on the operating income before
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depreciation and amoretization. nobody respects the studio given the volatility there. finally, cbs we got last night. that was better than anticipated. some are very excited. things have never been better. that's a great imitation. >> thank you. i can do even better if i prepare a little bit. it's the greatest company in the world. but let's say about cbs. the question there when you hear from investors is what multiple do you pay for the sale of the digital product. if they're getting paid nicely on, what's the margin? well, it's enormous. this is stuff that's already there. but what kind of a multiple do you put on that is the question that investors have. the margins were very strong. >> when they do that and they allow mcguyver to be streamed, is it a recuring revenue stream?
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it's a sale. they're all structured differently, so i don't want to say with certainty. but you see the negotiations that they have. >> all right. let's move on out of today's bell ringer. fresh off emerging is an independent down streenl with businesses and markets, midstream and refining. a part of the business currently making headlines when cnbc first reported the company selling its refinery to delta airlines. nice to have you with us, joining us right now is the chairman. by the way, were you surprised when delta indicated an interest in the refiner? >>. >> first of all, thanks for having us. we started started a marketing process last fall. we had a lot of people interested in that. first thing is, we got a good value. second, delta is a reputable company.
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and, thirdly, we think it's great for the state of pennsylvania for job creation. >> now, the company that you used to be a part of, they're talking about changing their culture because they're focused on production around the world and exploration. is the same true for phillips 66? now that you're no longer part of them? first off, he led us a focus of save, operations. a really difficult capital and really a heart for investors and shareholders. so we bring that legacy. and, for us, we have the space by putting it in. >> you mentioned that delta is a logical buyer. at the same time some of the critics out there say some of the critics didn't know how to run the trainer facility and make a profit, than how can an
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airline company do that? why does it make sense for you to sell it to a company like a delta? >> well, first of all, i probably shouldn't comment on delta's business plans. >> what's the greatest challenge? >> clearly, we thought they were a reputable company. they can manage businesses and it's what's good for the state of pennsylvania for job creations. >> is it going to come back the way it once did? >> well, i think for us, we come to the point that we didn't think the market was valuing our downstream businesses. so the splilt transaction allows two stand alone energy companies who have come out and focused on growing the r&m, the chemicals and the midstream space. >> we is refining continuing to be a challenging space? >> it's a great business. it provides fuel that is we need to run our country. it was 70 bnt of our income last year.
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we'll improve our margins and work on improving our concerns and the significant investments that we're going to make. >> how much can you improve given how important it is to the company and how fast can you do it? >> we've come from a five neolyte return to a 12, 13% return. we believe this is a solid 15% return. >> you've got joint ventures and various chemical operation. what do you see in returns of input costs and specifically natural gas? >> one of the great opportunities for our company is the shell gas. you see a lot of development in the lower 48. a lot of investment infrastructure and the gas gathering. once the facility is up and running, it's 800,000 new jobs.
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it's american energy, american security and american jobs. >> what about those who say we should start putting natural gas pumps at your service stations because that would allow a gps to manage what it puts its fleet on? is that a possibility? >> we're for all of the above. we think it's going to be necessary to drive our economy. you're going to see compressed natural gas. it makes sense for central fleets. we have vehicles around a central fuelling hub. so you'll see more of that in the future. >> thanks for joining us. >> it's great to be here. >> thebaics, very good. we want to remind you to send us your tweets and your blackberry 10 will be entirely keyboardless with some bear sentiment on the streets. a blackberry without a keyboard is like a blank without a blank. first, take a look at this morning's early movers.
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>> a blackberry without a keyboard is like a blank without a blank. it's like a restroom without paper. andre writes the blackberry without greed. patrick writes a blackberry without a keyboard is like pizza without beer. hash tag not going to happen. a blackberry without a keyboard, it's like an iphone without a cracked screen. some have said on twitter that they have taken the one competitive advantage that
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they've had and threw it in the trash can. >> it's pathetic if it's an old fashioned keyboard. >> yeah, but we'll keep an eye on them. and we'll keep it on chesapeake. the call has been going on for almost 45 minutes now. . >> the stock is down by more than 9% at this hour. so certainly within about a buck's distance from it. well below the average at this point and an extremely heavy volume. >> there was some hope it wouldn't be behind yesterday's role, go search for a new nonexecutive chairman. and the stock had been up 7.8%. interesting. and don't forget about mr. icon. there's so many different front lines in this one that you have to keep an eye on. >> trading day still very, very young. the dow is still up 38 points. the ceo resorts.
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a first look at how a bractly snowless winter affected them. >> it's ha tiechl again. if if you can guess this friday's number, it's all yours. tweet us your guess at csnbcsquawk c. oh, yeah, you have to be 18 years of age, too. sorry, kid. for all the official rules and details, go to cnbc.com. you've got until 8:29 a.m. this friday morning. good luck.
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welcome back, simon is here with a look at what's coming up at 10:00. we've got an analyst and savings. kate will join us with the conference call that's about to end. we're also going to talk about the dow being close to a four-year high. what does it mean sitting at home as an investor. we need to talk about the
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warmest weather we've had in a hundred years. good time for us, not so much if you're running vowel resorts. what is interesting is the degree to which investors could still get a dividend. >> meantime, you don't want to hit our radar this morning. iac interactive is one of them, coming up with earnings better than expected in some surprising areas, david. >> yeah, well, search for example. they bought ask jeeves. it looked like a deal that was not a good one. but they have sort of reformlated it with a lot of tool bars. it does seem to be putting up some very strong tool bars. let's not also forget they continue to buy back enormous amounts of stock. but it's funny, this has been an incredible performer over the last year or so. >> when we come back, the which he is peer energy conference call just wrapping up.
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we've got the headlines from two analysts. first, some breaking news. we'll get that for you right after a short break. don't go away. get better results in ap courses. together, they raised ap test scores 138%. just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students. let's solve this.
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welcome back to squawk on the street.
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you ordered from march, down 1.5%. that's darn close to expectations. we were looking for 1.6 to 1.8. last month, revised two tenths lower, originally release today 1.3, now 1.1. now in between this number, we had an high out of new york that dropped 6.2 points to 61.2 to round out what has been a weak data day as reflected by equities and lower interest rates. >> the drama, we'm bring ewe highlights and the company's conference call. get reaction from two analysts, the one with a buy raoulting, the other with a sell. and with the down perlite for your highs, we'll talk with 2 head of u.s. equity and strategies that beat us to rumania. the ceo of vail resorts.
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we'll find out what he has to say about the ski business and the winter this first quarter. >> our first story this morning, ceo spanks aubrey is about to wrap up. now we have the latest from cape kelly. kate? >> thanks so much, simon, so the call still under way. the q&a started around 9:30. shortly after the financial overview that the cfo gave. let's listen to what he had to say. >> i am deeply sorry for all of the distractions of the past two weeks. i have learned that there was a desire for more information during the fwp program which has been in place since 1993, the date of the company's ipo that was approved by shareholders in 2005. and i believe there's always aligning my interest with the company's interest and sure that i have gained.
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so you hear him apologizing for creating a lot of distraction and really the commodity community in the last couple of weeks. moving on, the analysts have actually focused on asset sales and the possibility of a share repurchase. no one has yet asked about the recent this is a highly indebted company. one analyst wants to see them buy shares back. the company stock has been taking a beating. even during this call, it was down 11%. a couple of times, it was asked are you going to repurchase stock. asset sales getting us more deeply into the oil business. and the earlier we could see a share repurchase plan happening is 2013. so essentially, i'll keep you guys posted, carl. but it's been a pretty focus on the business. >> well, kate, let me just pick
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up on that. what are you saying? yes, i had skin in the game. but we're in a situation where there's compellerly potential conflicts of interest. you have confirmed that chesapeake produced. the george is alleging that he got 1$1.2 billion to whom he wa selling hundreds of dollars of assets. and that also led him cash and they were selected to run one of the ipos. did he address those accusations specifically? if he didn't, they could run and run. >> he talked generally about all the distractions and the issues. he's said he's learned through this experience. there's a desire for financial transparency. he said nothing about the hedge fund, which was broken, i believe, in a story first thing this morning and, yes, i've had
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some of the issue here. is there a conflict of interest? around i think a lot of people believe there is. the hedge fund was a real eyebrow raiser. >> well, kate, there is quite clearly a conflict of interest. the question is did he manage it? >> well, how do you manage that? i don't know what the securities regulations are when it comes to managing the financial vehicle on the side. now, for whatever it's worth, i'm told that he's successfully hedged. he's said several times on this call alone, we've made $8.5 million. they took them off last year during the downdraft. he was managing money apparently for himself and his former colleague on the side. apparently, they tended to take more of a long sort of by in whole view. >> i hear they closed it years
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ago, though, right? >> yes, the rereporting was it was in existence from '04 to '08. i'm not positive that it continued in '08. although that's what i heard, too. >> thank you very much, kate. kate kelly covering the conference call for us. what does the future hold for chesapeake and who's most likely to benefit? phillip is an analyst with rezej. and neil is with sun trust. he has a bye, guys, good to see both of you. >> neil, after the past week or two, has there been any erosion in the confidence of your bye rating? >> no, as an analyst, here's the thing that is sigh monday brought up. my point is asset value is asset value. and i can tell you that anchors and reserves are still being sold out there for every bit of as pensive as they've been the last several months. so they've got six big liquid
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plays which you take the debt off of that and you still have well over a $30 stock price. >> the threat then this morning says no buy back. that doesn't make you wait, either? >> no, they already have these large positions. so because of what he's going to do in the next couple quarters, we're actually going to see that come to fruition. he talked about selling it and doing a vpp. he talked about the horizontal miss. so besides even these three, he's got three other big liquid plays that he could do something with. so i think we're going to start to see some of these valuations come to fruition very soon. >> so phillip, you have a sale waiting on the stock. where do you see the stock if you just take into consideration that's asset value, which is what neil was talking about. he's trading at about 30 bucks, which is where we are.
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>> the problem we have is while i do think that there's asset value, it's so encumbered by not just the debt, but the debt is off the balance sheet. i think they're debt. dead. they issued preferred stock. to me, that's debt. their debt is much higher than they say. and then there are counting methods that are somewhat opaque. you can't really find the true story. you see the development costs are hidden because of the accounting method that they use. so i don't think that -- i think there's a lot more offset to that asset value that appears on the circuit. >> how much debt off balance sheet are we talking about? >> well, the 10 are about -- they've gone about $6.4 billion. and some of that has come away with the payment of debt or settlement of this worked. i would estimate it's between four to fife today.
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the lease master, probably between 1.5 and $2 million that they've done. they've got about $4.5 billion in preferred stock. those are all the pieces that i know of that are out there on top of the 13 plus billion in the first quarter. >> neil, just to come back, we're rightly focusing on the assets here. but what about the legal risk moving forward. could that not be material for the stock? let me move a bit forward. we're just trying to find directors on the chesapeake side. we did. eventually. still sitting there is charles max well who is a sell side analyst. could you imagine a situation where you were allowed to cover the industry and still do? >> you do -- i think you do see that occasionally out there, simon. again, i guess what i would bring up is, again, this is nothing that's changed over the last quarter or the last month.
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this is something, again, not to say that it's right or wrong, but something that has been going on for a number of years. maybe because, to me, with gas at $2 and the stock price where it is, it's becoming more in life. and not guilty making light of your point. >> the point i'm making is there not now a litigation risk? or is there not a litigation risk and we can focus on the out set snuz. >> i don't believe that there is litigation risks on there because there's other companies, other than chesapeake and i know of others that i don't cover that you have some board overlap, very similar to this. i mean, again, is there -- could you say there's no exposure? no, you could never say nothing. but at this time, do i think there's significant risk, no i do. >> finally, before we go, does aubrey survive and is that material to your rating? >> it's not material to my rating. does he survive? i think that the risk for him is
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increasing with everything that we see. >> guys, thank you for that. phillip, and neil, talk to you guys soon. >> the latest survey from adp showing weaker than expected private job growth. this ahead of the labor's big employment report due out on friday. this is inside the adp member. >> steve? >> this strongly disappointing jobs from add prompted a mixed reaction from economists. it ranged from those who slashed their estimate from the friday pay report by as much as $75,000 down to 125 to those who remain confident in the number for a number as high as 175. here's the data that we're talking about. they were looking for 170,000 plugs. still remaining strong above 200,000. and the estimate, 168,000. my guess is that is endangered. take a look at the comments that we've gotten. it looks like the economy hit a bit of a lull.
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but whether that is weather related, not yet clear. goldman saying as with the official bls, we believe that a pay back from warm weather earlier in the year could explain some of the slowing in the adp measure. remember, down to 125, 000. hfb reducing its number from 125 to 200. it could swing the other way in april. but we can't ignore the number. we think it's still much less than march of spring, 2011. john is over there saying we do not use it in our forecast. basically, they're sticking with their 175,000 forecast in april. take a look at the chart of how they've been triageing. it's been plus or minus about 48,000 for the bls private sector. and there's that 168,000 for april.
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so there's this well below that forecast. assuming there is some weather pay back. the question becomes what's the right trend? so if that's the base case, than we could be in for a couple of weaker months. the trouble is taking a bet on a bounce back in this uncertain economy has been a pretty risky one. carl? >>. >> i see he missed by an average of 63 k on either side. >> by the way, i think that report that you're reading looks like the overall. i compare the adp to the dls private sector. adp does not try to predict what the government is going to do. it's a little bit narrower. but, yes, it's been plus or minus 50,000 either way. >> all right. we'll have to wait until friday. now, coming up on friday, it's time for you to nail the number. we're asking you to tweet us
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your prediction. and you'll have a chanand o win a hat. [ applause ] oh, yeah. >> that's the squawk on the street, gang. >> it's a nice hat. >> it's that cnbc squawk st. and, of course, visit sot for official rules. >> yeah, that's some new things. coming up on the program, the new bets on europe when it comes to investing in the banks there. we're going to find out how the hedge funds here in the united states and in connecticut, in particular, are atrekkeding to profit from the now. and not only is the dow at a four-year high, it's up at about 14% over the past 6 months. so here's a look at how you would have faired over that period if you'd invested $10,000 in certain banks. not the dow oaths. just these banks. region's financial, you'd have made more than 18.5. bb&t, 14,400. and wells fargo, more than 13,700.
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>> we're meeting, taking place in lower manhattan where some of
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the chiefs of the nation's top banks are gathering. good morning, mary. >> good morning, carl. the melting was called by the regulation. he's going to be sitting down with the ceos to discuss the stress test of this out reach coming. as regulators look at grievances, most notably the feds lost modelling on loans as well as concerns about communication or lack there of. now, ceos. of the nation's top banks not among those on the guest lists. the bank failed to win approval for a requested dividend increase. while the fed may want to talk stress test, the ceos want to talk about other pending regulation, including a proposed rule to limit their exposure to a single counter parting.
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>> comment letters, grossly overstate exposures relative to realistic risks, as currently written and goldman saying it would eliminate 150, 300,000 jobs here in the u.s. in a nutshell, they calculate the bank's exposure to a single company and the limits set using this methodology. the banks fear it would hurt among other things liquidity and certain markets as well as raise the possibility of increased systemic risk. this meeting is expected to start sometime later this morning. but when we have details, we'll bring it to you. >> we'll look forward to that. thank you very much. mary thompson there. we're down now 7 points on the dow. one of the major points for that is the spanish banks today. we thought we'd get a view on
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how some u.s. hedge funds have been making the money on the other side of the atlantic. chris wheeler joins us. he's usually based in london, but he's here visiting his clients. good morning. these hedge funds have made a lot of money coming out of capital to where we are now. how did they play it? >> your point about the injection of capitol. there's a little bit of a cap to where that meant. and then we sort of spike from the end of november. obviously, a lot of funds got pulled out. but i think once they got through that and once we got into january, very importantly, one of the biggest banks, then i think you saw a number of the fans playing the nations looking at italy. >> the equities or the debts. >> good point. the equitieequities initially. what a number of funds did really well on was by buying the debt and supporting the debt on
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the basis that i don't have the full equity here. that's been, you know, a big winner for a number of fans. >> so what are they telling you now? >> well, supply, supply. we had the second biggest injection and everybody said, well, you know, does that mean, you know, we're still fine? but of course, what's happened is the whole political landscape has change d talking about not getting involved in june, it looks like it won't be as swarm as people thought. which, again, the whole issue is back on the table and people are really ner again. >> you cover goldmans, you cover morgan stanley. credits as we watch what's happening in particular. and we've gone to the investment banks and said what can we do with the banks that we have in spain in an environment where the property market could fall 20 or 30% from here.
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how dangerous is that to the u.s. names that you cover? >> well, to be fair, the u.s. names, obviously, are exposed as the european names, although they're all involved. in many ways, one of the things is they're looking for opportunity because they've crossed the number. we had it this morning with the fledge banks tomorrow. we had it deleveling. and there's opportunities to get into the market and are in certain areas. >> you know, you mentioned nervous again in terms of the hedge funds. i would make the point that they were very successful in europe. but those same nephrins kept it in the u.s. under performance yet again. but they're nervous again. what do you expect the plays are going to be as we head into the summer? >> well, i have to say, again, investment banking in april was dire. and it's clear that if it continues, the kind of thing we saw yesterday, the further downsizing, you know, will probably continue.
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so my sense is from the big, universal banks, those people are going to be taking some money. >> what about the hedge funds? >> they'll be taking money off the table for long positions. the question is where do they take the risk on the shorts. as we saw in november, you can get calth pretty badly. you're not quite sure when you're placing some of your bets on if market. >> chris wheeler joining us there when we're based in london. >> shares and tears on a tear. the company's annual shareholder meeting is underway. we have eel get the latest from there. eddie lampert expected up next. >> what i'm hearing is that delta is seriously consideration purchasing a refinery, which would be a first.
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jettiest. there's a look at the dow. jp morgan. only gainer is philly morris. and just barely. .06%. >> it looked like it was going to rain. >> kraft is -- or was one of the best performing in the dow last month. so interesting that it continues today. weekly data coming out of europe. but will thursday's change this trend? time for money. willy williams is in new york. willy, always great to see you. what are you expecting from this meeting? >> well, from the meeting tomorrow, we don't expect a lot. but, given some of the surprises we've seen from other central banks, with the rba deciding to cut 50, banks like mexico
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deciding not to cut. the market is aware of anything. it's clear that europe needs to do something to stimulate growth. is there a possibility of a rate cut? >> yes, but it's not the central caution. >> in the trick with euro west dollar, you've got a lot of cross currents in that trade because of the job support. you're not looking at that, you're looking at another. which? >> i think with the euro dollar, i'd like to sell it if it spikes higher towards 132.50. i think with the ecb as well as the french and greek elections, there is a chance the euro should remain under pressure. but i'm just cognizant of the fact that we're going to remain in the middle of the range. >> can i come back to something you eluded to at the top of the center. maybe from the new zealanders, one of the great has bandage the been the trade on places like the united states or japan and invest it like the awes central
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yon dollar. are they being broken for a lot of your colleagues? >> i think yes. we've seen surprisingly strong data out of the u.s. like places like australia are competing. >> all right, willy, thanks for your time. >> thank you. >> willy williams. for more currency trades, be sure to catch mr money on friday 5:30 p.m. eastern time. go to currency class, money in motion.cnbc.com. >> and we talked about the economic indicators. but as we mentioned at the top, spain's pmi, 43.5. italy, 43.8. also in grease, in france and, of course, germany was the real disappoint lt. ment. >> we knew we were going into recession in europe. what we're now beginning to realize is the severity. that's the fear. admittedly with their manufacturing. but important none the less.
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actually, a lot of the dips that we had in the first and second quarter were relatively mild given the level of the fear that we had. and some of the corporate commentary. emerson saying that their hopes is markedly lower than it was. sharon has some inventories. >> good morning, carl. inventories for crude supply rose by 2.8 million barrels in the last week. up 2.8 million barrels. gasoline supplies declined by million barrels. and fuel supplies were down by 1.9 million barrels. we had seen it last evening, as well, with big declines in the refined fuels and a build includes supplies. this confirms this kind of data. as a result, we're basically trading ahead of where we were in this number. we are under 106 dollars a battle. we have still broken out of this
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range that we've been in for over a month and a half. the key level here, of course, is 105.50. we're slight le below that mark. we'll see if there's further weakness here. now that this data point is behind us, traders are focused on friday. >> all right, you'll have to wait for that. when we come back, sevina super mania. merrill lynch is head of the strategy. you'll want to hear for the new call she's make qh, not just on 2012, but also on 2013. "squawk on the street' is coming right back.
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nchtsds and with a little earth, wind and fire, new orders for u.s. factory goods recording their biggest decline in three years today as demand for transportation was a bit slumped. orders dropped to 1.5% after a 1.1% rise in february. target will stop carrying amazon's kindle because of a conflict of interest. target will start removing the kindle and shipments will stop by may 13th. no word on exactly what that conflict is, though. and the worse-than-expected adp
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number weighing in on recruiting stocks, all in the red today on that news. the chesapeake just concluded the stock is trading in negative territory on heavy volume. some believing this is a buying opportunity. kate kelly will join us on what gumprechtly was say right towards the end of that briefing. meantime, we're now an hour and five minutes into trade. yes, energy stocks have been bought lao partly because of chesapeake. the sales are down about 2.5%. materials are also lower. the moves so far today, down here at the nyse. you can see that the ratio is 3-1 declined to advance. on over at the nasdaq, you can see that the position is very similar. >> will this rally hold? ahead of u.s. equity at bank of america. merrill lynch joins us.
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now, avita, always good to see you. your 12-month target master is 1400. which, of course, we have surpassed so far. it's a 12-month target. we haven't -- we don't really know if you're right in the end. what happens between now and end of the year? >> we'll be flat lined, essentially. >> great question. i think on the margin, some of our models are getting a little bit more postive. just recently, we took earnings down by a dollar. largely because of softness in the gas prices chlts but i think one positive indicator we're seeing on the market right now that's changed just recently is sentiment. in fact, one of the longest-standing market timing barometer is called the south side indicator. that actually switched to a bye signal. it's based on an aggregate wall side.
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so i actually think that things on the market are looking a little bit better. >> it's contrary, then. >> what's that? >> it's a contrary yon. >> exactly. it's a contrary indicator. it's doing the opposite of what the herd is telling you to do. >> so you're observing an indicator and whether or not they're bearish or bullish and you recommend the opposite of that? >> yes, at some level, if everybody is saying the same thing, and i think that strategists have all gotten more bearish, if that's the case, it's going to be the opposite. at the extremes, it depends to be a very reliable predictor. >> the other signal that we've seen get more positive is that management is actually starting to guide up relative to consensus. so i think that on an earnings basis, we're seeing the insiders of corporations get a little bit more positive on their own prospects as well. i think just in the last month, we've actually seen some signals
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shift to slightly less negative. >> but it's not enough to get you to move off of your target. >> so at this point, i think we're at 1400. the upside is more than the down point. just given what i've mentioned. i do see next year as another tricky year. we've put out our earnings forecast for next year. >> we've seen about 7% growth in earnings. and that tranchées lates into another year where you've got trend line crithidia for the market. >> i think that sticking to quality growth, those kinds of things makes a lot of sense. given all the unknowns about spending cuts. i do see things looking a little bit better than they were last month. >> sevita, what does it mean when you see the dow as we did yesterday, at a four-year high. today, the usa today newspaper says that the dow powers back to a new bull market high.
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the index is muscling its way upwards. but then the interesting question is monument securityings. does the market indicate that you've had a full recovery in the united states? or is it actually just a function of the liquidity that central banks are pumping in? >> great question. i actually think it eegs both. it looks like a pretty good place to be. they're cheap. they haven't done much for the last decade. i actually think that the dow is kind of the higher quality component of the equity investment universe. it's got big, large cap companies that have managed to grow earnings at a stable clip. i don't see this high as a reason to sell. >> to be clear. if you believe that the market is up at these levels partly because of what the feds have been doing, do you need the fed to continue what it is doing to keep prices this high? >> good question.
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i think part of the fear in the market right now is that the liquidity runs out. i don't necessarily think you need more to keep it going. and the reason is the positioning today is much more bearish than it was last year. sentiment is much more bearish than it was last year. so i think that a lot of the negative sentiment, a lot of the, you know, negative positioning could actually spawn a further rally. >> so which sectors do you like? torp toech is the new high quality. these companies are starting to initiate and grow dividends. eh think that's a big team that could have some traction for the next couple of years. >> does that sentiment apply to sectors? it seems like most sterility
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strategists are very bullish. >> so if on a sector level, we found that sector overweights can persist for years. we found that energy was one of the overweighted love sectors in the mid 2003 and 2004 and that continued for a multi-year period. so i wouldn't use sentiment as a contrary indicator. i think these cycles can run for much longer than just a couple of years. >> finally, obviously, a key dynamic about the month of april was a switch from offensive to defensive, right? i mean, telecom and utilities certainly were the winners. do you think those who are going to go defensive for the summer are making a mistake? >> you know, i actually think that there are better defensive pockets of the market to be in than telecom and the utilities. my favorite place to be is
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staples. it eegs got growth and it hasn't run up as much in valuations to the point that it looks kind of stretched at this point. i think staples is a much more atribouletive, defensive pocket of the market. another favorite of mine is farma. you've got yield and downside protection, but it hasn't run up as much in valuation. it looks a lot more attract i have on evaluation framework. >> all right. thanks for your time. >> thanks so much. >> i want to get you a live shot of andrew's air force base. the president making that surprise trip to afghanistan. just now arriving safely back home, even as the debate about the length of time to which the united states will be involved in that country continues to swirl around the nation today. president obama back safely from afghanistan. when we come back, research in motion trying to make the case for its new keyboard blackberry 10. and the company's future. we'll get a live relate from the blackberry world event. and with the dow four-year
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tnchts worst performer on the s&p. almost two times as bad as the next worst performer. the company just wrapped up its conference call. the company is over conference quarters. kate, doesn't it sound like the hedge fund at all? >> it didn't, carl. although the pressure from all sides is relentless. if you look at it, it's about 11.4 billion. it has lost 4 billion or 26% of its market cap in the past month alone. the shares are just getting hammered today. what's interesting is i didn't hear a single question in this 90 minute call about the scandals in the last couple of weeks.
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the revelations that he ran a hedge fun for a few years on the side. but there was so much skepticism about the company in general, it had just cut its cash flow estimates 48%. it's highly indebt teed. it's planning monohtizations. they're aggressively trying to pay down their debt and become more of an oil company. those they thinks aren't particularly knew. i was surprised with this call. how quickly can you create more cash for yourselves? how much flexibility do you really have? give us an update, et cetera, et cetera. at one point, aubrey had a moment where he had to address the general atmosphere. >> this has obviously been stressful for me. it's hard work. it's not easy. i think we've achieved that.
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and, now, from that best asset base in the industry, our goal is to achieve the best return. >> now, remember, guys, when he says that, he's actually tablinging about running the business. not necessarily his own personal controversy. but i'm sure both are weighing on his mind. investors are very concern. it rallied briefly after the call ended. it was almost like let us get through this thing and move on. >> yeah, we were just talking about what the street currently sees. six strong buys -- i'm sorry, six buys, 15 holds, only two sells. i wonder if that's going to change soon? >> i felt like the tone could have been worse. we saw what happened with p&g. it wasn't quite at that level. but this is a very charming and charismatic ceo. he's usually his own spokesman. he seemed to be a little bit unnerved by all of these recent events. to hear him apologize for anything was a real shock. even when it came to hedging, which is traditionally his
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strong suit, he talked about taking hedges off and what a mistake that was. he had to point out it was a rare mistake. but he's clearly made a stumble and it's shaken his confidence quite a bit. >> okay, appreciate that update. i'm sure we'll come back to you later on today. when we come back this morning, how did vail resorts fare during ski season while coping with that warmer-than-expected winter? we have the ceo of that up next. rick santelli's working on the next hour of "squawk on the street." >> i never thought something as kind of arcane as floating rate notes could be a leading indicator, but it may be. hey, how did the ism yesterday lead all investors astray? we'll talk about surveys versus factual data like adp. last, but not least, how was europe's recession and how their behavior in the future to deal with it make you some money? all at the top of the hour!
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the warmest winter in 100 years. good times? perhaps not. if you run seven ski resorts on the west coast. joining us, rob katz, chairman and ceo of vail resorts. mr. katz, how bad are the metrics now that the dust has settled, so too speak.
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>> actually we're pretty proud of how we did. this was the worst winter in u.s. history for skiing. one of the most challenging obviously for our company. our skier visits were down 12.5% but our lift revenue was essentially flat and our spend-per-skier was up 14%. so those metrics allowed us to be down for the year in cash flow only about mid single digits and to us, that's actually a pretty good performance. >> what role did these early bird passes that you sell play in boosting that cash position? because obviously you've reacted by extending what you call i think the epic past $659 access to all the resorts but for next year. >> absolutely. i think our season passes are our critical to our sex because they provide tremendous stability going into any particular season and they create tremendous guest loyalty with folks around the world. what's interesting is that our epic pass is actually sold in all 50 states in the u.s. and 80 countries around the world.
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accounts for almost 40% of our total lift ticket revenue. the good news is --- the good news is that in addition to our performance this year being relatively stable, even giving these unprecedented weather events, going into next year or spring pass sales for the 2012-2012 season will be ahead of last year's record pace so that gives us great momentum going into next year. >> that said, what is your real estate position? you are managing condos. a lot of people have property on your sites as second liens. i was skiing in mammoth and it was quite clear, rival resort to you, they were keeping some of the retail operations open without tenants possibly at a loss to give a sense of normality. are you having to do the same on your resorts? how bad is that real estate component? >> you know, there's no question that the real estate component is more challenging than the resort component. people are a little bit more nervous to make real estate purchases right now but when it
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comes to the base area facilities, one of the reasons that we have so much success this year is the investment we made in shopping, in dining, in hotels. and these things which are different than other resorts around the country were actually quite healthy. march this year, for instance, in the town of vail, sales tax revenue was actually up 1% even given these very warm conditions and that's because people are going for many other reasons, not just the snow. >> sure. we've got to run blb katz. before we go, what are you doing with the dividend? you became a dividend paying stock last year. are you able to maintain that? >> yeah, absolutely. last quart we actually increased our dividend and so we actually feel very confident in the future cash flow from the company. >> good to talk to you, sir. thank you very much. good results in a difficult period. rob katz from vail resorts. coming up, it is tweet time. all about research in motion's keyboard -- complete the following sentence -- a blackberry without a keyboard is like a blank without a blank.
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tweet us @cnbcsquatst. your answers are straight ahead.
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squawk on the tweet is a good one today. research in motion's new blackberry 10 is missing something signature to the smartphone -- that's a keyboard. we are asking you to complete
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the following analogy -- a blackberry without a keyboard is like a "blank" without a "blank." >> joe writes like a parachute without a rip cord? debbie writes like a bicycle without its wheels -- don't do it! betly writes a blackberry without a keyboard is like a tech company without an idea. >> like a nokia. >> just like a nokia. >> it's like a nokia. >> i don't know. some say it is the onlyeason you would have a blackberry at this point. what's fast tonight? >> former fed governor randy krosden and the ceo of pro logis. here's what you might have missed earlier this morning. welcome to hour three of "squawk on the street." here's what's happening so far. a good quarter and we're pleased with the start to the
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year, both the cable company and nbc. >> i've met a lot of facebook people, some really great facebook people, and i think they were really mad at me for like a while, then the movie came out and it ended up being a very positive thing. >> adp releasing its estimate for the april jobs report and it is much weaker than expected at 119,000. >> with the world trade slowing sequentially, even though it does seasonally, i think it is still a question mark as to whether they can really get to the 100 billion level. it seems unlikely but we'll see. >> the company is stepping up its original content to bring in more big brand advertisers as it becomes more like a series of niche cable channels. >> the refinery we started the marketing process last fall in october. we had a lot of people interested in that. first thing is we got good value for phillip's 66.
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delta is a reputable company, they manage complex businesses every day. thirdly we think it is great for the state of pennsylvania for job creation. >> does aubrey survive and is that material to your rating? >> it is not material to my rating. does he survive? i think that the risk for him is increasing with every new allegation that we see. good wednesday morning. welcome to the third hour of "squawk on the street." some of the rally the dow had yesterday on the back of yesterday's ism number, undone today by a weaker than expected adp number. the dow giving up 44. s&p back below 1400 at 1398. the nas at 3,041. mastercard reporting its highest growth rate since the company's ipo back in 2006. back to the stock story dominating the headlines again this morning, chesapeake reporting earnings that did disappoint the street. conference call wrapping up not
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too long ago. reuters reporting aubrey mcclendon ran a $2 million nat gas hedge fund on the side. he talked about the trials and tribulations of his company in the past two weeks earlier this morning. a day after the dow reached its highest lows in over four years, futures are reversing course, slipping slightly today on that weaker than expected adp number. as jobs friday looms and european fears come back into play, what's the next move for the markets? we'll talk to the two five-star fund managers to get their take. research in motion not feeling the love from the street today on the back of that blackberry 10 announcement. what does r.i.m. need to do to turn the tide? we'll break it all down. sears hosting its annual shareholder meeting today. what are shareholders hoping to hear? we'll talk to one and get his take on sears prush fush for re-invention. a quick market flash.
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>> look at shares of nike here. those shares hitting another all-time high today. if you take a look at this chart over not only intraday period but a five-year, a stock that continues to hit higher highs. a number of positive analyst mentions over the past month. it is the fourth best performing consumer stock over the last year. they have the new nfl deal. a number of other things going on and nike keeps performing for investors. >> scott, talk to you in a little bit. scott wapner is coming up at noon. back to the markets, equities trading down after yesterday's big up side on that better than expected ism number. today's adp though not nearly as hot. disappointed the street and also some european fears creeping back into the forefront. what's next for equity? two five-star fund managers join us this morning to talk about what's next. president, portfolio manager ever the permanent portfolio fund and, michael, is it risk on
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or risk off for the month of may? >> as long as corporate earnings hold up -- they've been surprisingly strong in q1 so far with 75% reporting, that's a great underpinning for stock prices. the income story for investors is good for stocks and it's been light volume so there is a lot more room for new volume. >> april is all about instead of tech and financials, it was all about telecom and utilities. are you position be some more defensive stance to get through to make your way to october or does seasonality matter to you? >> we are not. we're believers in the global growth story and the u.s. is growing anemically and may be underperforming its potential. still growing. emerging markets are still growing. that combined with easy money, which we don't see changing, bodes well for commodities, materials, u.s. manufacturing abroad and a lot of other industries actually, really. >> interesting. george, we got the 10-year down
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to 1.90%, your theory -- bonds are a unnecessary evil. >> all you need is a minor spike up in interest rates and bonds will go down. we think that's inevitable. we prefer to see people owning stocks. stocks, the s&p 500 has a dividend yield of 2%. don't forget that you pay less on taxes on dividends. we think the u.s. economy is great. we focus on the u.s. economy. we're more domestic oriented. we think the dividends will increase over time. also we think that's a better place for your money if you can afford to withstand a little bit of volatility with stocks come a bit of volatility. >> george, a lot of people want to center in on apple's action over the past couple of weeks. not because of the specific story but just as an illustration of how the longs have gotten complacent. right? the action has not been impressive despite what was truly a blow-out quarter. do you think that sentiment per
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vadz stocks overall where people are either locking in gains for the year or they're just not sufficiently impressed by incredible growth. >> well, if you look at apple specifically, it is something that is a harbinger for what's going to happen in the future. we tending to long term holders of stocks. we think and sl a great buy. i think it can easily get to $700. it is in the $600 range right now. remember they have no debt, they can pay a big dividend. everybody uses iphones left and right. you were talking earlier in the show about the problems with blackberries. that's ubiquitous. everybody in the world is switching. china included is switching to using the iphone. it is a wonderful product. don't forget ipad and everything else they have. fantastic company, well run. i think it is a great buy long term. >> finally, michael, some of your picks -- freeport, boston properties, wynn, pro lodges, gold. >> they're global and diversified. obviously freeport with copper, a material stock.
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wynn, definitely emerging market growth. prologis a play on worldwide activity and growth being a warehousing reit. reits have generally performed very well. they are a hard asset plus they play dividends. with rising rates, an improving economy, has been a good story as well. >> guys, appreciate you joining us this morning. it is going to be an interesting summer, to be sure. george, michael, take it easy. to our capital markets editor gary kaminski with some information about lehman. >> every person on this floor i can assure you remembers if they were in the business where they were on march 15, 2008, the day the news hit the tape about the transaction with jpmorgan, $2 a share. what's amazing in these documents, you could access all of them through the "l.a. times" who has links there. you've got all this information about what was happening in terms of the lehman reaction internally. i've got the call on. these are 67 pages of phone call
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logs in terms of what was happening. i find it fascinating. take a look at some of the calls. these are some of the calls that were coming in to lehman the day following the bear stearns transaction. you had government officials, other ceos, private equity players, pr players, hedge fund managers. but one stood out quite interesting -- take a look at a call and e-mail that was subsequently received into lehman. if we can get to that -- these are more sample calls. hang tough, made some money on your stock. it was crazy down at 22. discussed bear. remember lehman had a very, very volatile day. sokol doesn't say we have no idea whether he was referring to making money trading for the berkshire account or his personal account. don't know. obviously that's something that given the subsequent events will be quite interesting to know. this to me -- again, i encourage anybody who wants to read this, go on the website. it is just amazing stuff. take a look at this comment --
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here we've got some more calls to take. it came in on the 19th and 20th. hedge fund managers, ceo of aig, ceo of black rock, american express, but take a look at one that sold march 20, 2008. congrats your results. glad you squeezed the shorts. i know your people. you have been very good to us. hand to hand combat this week and we wanted to step into it. you called your clients -- bear did not. have an idea who that call was? >> i have but i'm not going to say. >> this was raj rajaratnam giving a message march 20, 2008, to lehman brothers. again, it is just fascinating stuff. as i said yesterday, it is better than any fiction when you want to read what was happening at the time. it is so relevant even today. given all the things that continue to happen in terms of the industry, companies, we're going to wrap this into chesapeake later today and some of the stuff we tell people about weeks ago and it is coming
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out. what you see here is what happens when a company's in crisis and how they try to basically manage that situation. >> what's the source of this material and how can people read it for themselves? >> again, "l.a. times" has links on their websites to the story. this is all public information that went into the bankruptcy proceedings and basically this was originally confidential information. much like the compensation stuff we did yesterday. but it is access to anybody who wants to take a look at it right now. >> you think the history is well understood but this makes it a lot more granular. >> again, i read through this and amazing is the only thing i can think about when i look at some of the things. i didn't point this out yesterday -- we talked about arrogance. it has always been my contention and continues to be that dick fold went to work every day, including the days here, to basically save that firm and having been a colleague of his, i know that his intent was to save the firm in every way, shape and form. when i refer to arrogance yesterday, i was referring to a lot of the people that worked
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underneath him that gave him, in my opinion, a lot of bad information in days of a crisis. >> talk to you in a little bit. as you make your way to the desk, let's get to the cme group as well. rick santelli, how you doing? >> good morning, carl. it is a wonderful day in the neighborhood. floating rate notes, boring topic. right? floating rate notes, we call them frns. okay? floating rate notes. today, the treasury gave us some information may refunding next week, 3s, 20s, 30s. they announced the sisz and gave us some ideas about borrowing needs and whatnot. but what they did say was -- this was been ongoing at cme with interest rate traders, they think there's benefits to the issuance of floating rate notes but they didn't give us a concrete time. they said today officially they'll revisit at a later date. why is this important? well, think about this. what happens on the twist? they buy 30s, they sell 2s. there's a couple firms that now
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have 2-year notes in every drawer in the office! yes, they do. and, they're at very low rates. so why would fixed rate versus floating rate be a bad thing for taxpayers but maybe a good thing for a lot of people in the business? because if rates should rise, they're going to get creamed. floating rate notes for the guy issuing when rates go up, they have to pay more. but if you're in the fixed rate notes on the ownership side and rates go up, you're out of luck. you just have losses. so this may be a forward indicator. when you see them actually announce they're going to issue floating rate notes, it's going to tell you there's some anxiety at treasury about low interest rates. maybe that changing or just the amount of 2-years that wall street's holding. surveys versus facts. boy, yesterday's ism certainly didn't lead you down the prim rose lane in terms ofmakering money. that's mostly because surveys really are kind of mushy. i'll tell you, there is one positive about surveys. they don't get revised. facts like today's adp can get
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revised. but if you really go and look at some of the leading indicators of some of these regionalized in particular, surveys do better when we go from bad times to good times. but human nature answering surveys, they don't do as well going from good times to not-so-good times. european' future behavior, how many people have gotten rich predict being the anxiety and issues of insolvency in europe? short the euro in no, they didn't get rich. more and more countries in recession, think about exports. think the big trade as they get deeper in a recession may actually be to cheapen that currency. >> interesting take on some of those surveys and the way we all like to answer certain types of questions. thanks, rick. research in motion outlining the future of the blackberry placing a lot of hope in the hands of this product -- the blackberry 10. is it enough to turn the tide? we'll talk to two top-ranked analysts when we come back.
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it's that time again. how would you like to win a hat signed by the entire "squawk on the street" gang? all you have to do is just nail the number. if you can guess this friday's non-fa non-pharm jobs number, it's all yours.
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time warner had results out the past 24 hours and the call's happening right now. julia boorstin has more on what they're giving on that. >> that's right, carl. though the call is still ongoing. ceo just said he's bullish on advertising and affiliate growth that high ratings especially the turner networks means that he plans to drive a hard bargain. >> it puts us in a great position. it gives us great confidence as we enter our next cycle of affiliate negotiations at turner. >> the stock is trading a little bit lower on weakness in its magazine division as well as higher tv programming costs. if the call just moments ago buwkes dismissed concerns time warner isn't licensing enough of its content for digital streaming saying that its
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product hbo gold will have a positive impact on the business going forward. carl, over to you. >> julia, we know you'll bring us more headlines as they become available. thank you very much. scott wapner has a quick market check. >> all job sites are down. job related stocks are taking a hit because possibly of the adp report. linkedin shares are under pressure here by about 2.5% on some reports that the site was going off and online. we posed a number of questions to linkedin this morning, including where is your site down, is it everywhere, when will it be back up, what's the cause of the outage. they've tweeted a response -- some of you may be experiencing intermittent problems with the site. our team is aware of it. we are working on it right now. stay tuned. again, carl, it is hard to say that the decline in the stock today is directly related to this report given the news of adp and given the movement in some other job related stocks. but nonetheless it is a story
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we're following. >> we've seen weakness in all over the world. stocks finished high after the close yesterday. if you had invested six months ago $10,000 in the dow you'd have $11,200 today. how about some of those high-tech names though? 10k voofinvested in aol, you'd $19,000. $10,000 investment in qualcomm, you'd be sitting with $12,700. not bad for just six months' time. on to a tech name that may not have given you such great rerns -- resear returns -- research in motion. as the street digests the news of a keyboardless blackberry 10, what else is on the docket for r.i.m.? brian schactman has a lot more on that. morning, brian. >> carl, thank you very much. we have a little bit of news on that. all the rumors that the physical
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keypad was going away. we just finished up with the ceo. he basically said we want to have the best typing experience in the world, that the keypad will be part of the blackberry portfolio so i asked him directly will there be physical keypads in the plaque bblackber portfolio. he said yes. the virtual keyboard might be on the first version but they will have the keyboard. i asked them also about market share. obviously they're hemorrhaging here in the u.s. i asked if q4 of 1012 when they launch this will be too late. he said we're not just just to be here, we're here to win and he expects to reverse the trend with blackberry 10 in terms of u.s. market share. this is not about the consumer. this is not about the investor here at blackberry world. this is about the app developer. they want to keep them excited, they want to get them to invest resources in blackberry. you look at numbers, aen trondrs
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450,000 apps. iphone, 500,000. 70,000 for the blackberry. they want to make sure that number goes up exponentially because the blackberry 10 is going to be different software. they are guaranteeing $10,000 if you get a certified app for this new platform and generate $1,000 revenue, they'll pick up another $9,000 just to make sure you make your money. little more energy here than i had expected but people are having the same conversations you guys are going to have -- will research in motion and the blackberry be a viable entity in the marketplace a year or two from now. >> thank you, brian schactman in orlando, florida. apparently that physical keyboard will continue. breaking news this morning from kayla tausche. >> yesterday afternoon underwriters closed the book on the carlisle ipo at 4:00 p.m. the demand really wasn't there for the existing price range of $23 to $25 a share. it actually lowered that to 22 to $23 a share. of course we'll get final pricing for you after the bell
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tonight. now this interestingly would value carlisle at $6.9 billion. they're ipo'ing roughly 10% of the company and at the mid point of that range if they priced at $22.50 a share it would raise just about $686 million for the firm and that's before exercising the green shoe that the underwriters will have. carl, lower demand than expected for the carlisle ipo. they're lowering that price range and we'll have the price for you this evening. >> thank you very much, kayla tausche. >> i'm going to have to completely disagree on kayla on that what i've heard. pricing in that price range because bass as we pointed out last week, they wanted to get those very strong long-only demand on the book. i heard they'll close tonight very strong. i think the pricing in fact was right in line with what we suggested last week was they want to change the experience to date for those that have invested in these private equity firms in the market. >> you're not agreeing with her
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numbers -- >> $22, $23 was the number but i think the reason was not because of soft demand because they want to back up to a level where those long-only buyers were not going to flip the stock. >> gary, i don't disagree with you. i think that they definitely wanted to be valued at a discount to create that poe sengs upside as you've seen on the other private equity ceos. i was hearing from inside the road show they were guiding distributable earnings to be lower than they actually were this year even though they had very strong growth on that and for the last three years as we saw, they're actually guiding that lower so people were saying if you want us to be guaranteed some up side here you're going to have to bring that down. >> okay. we'll wait for tonight. kayla, thanks for that. dig a little bit deeper on r.i.m. and the blackberry 10. a top ranked analyst, so the southerland. i've heard this be described as a would-en iphone whether there
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is a physical keyboard or not. what do you make of it? >> i think blackberry's going to come out with a good operating system based on qnx. it is a pretty stable platform and should be robust. i think they lack the ecosystem of app developers almost one-tenth the number of apple very maniers and lack the ecosystem of devices, pc, media players and other devices even their tablet trails the eye pad greatly to access all this content in the cloud. >> so is targeting developers like they apparently are, that sounds like they're playing their hand as best they can. would you agree with that? >> i would agree app developers is clearly one of the key underpinnings to make an ecosystem successful. if they address the device side of the market being moving beyond just a smartphone manufacturer to a multi-device manufacturer or partnering there, that would solve another big part of the problem. but without solving both, i think there is still a lot of trouble ahead for the company. >> how bad is the subscriber base erosion and have you seen
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any signs of it flattening out at all as apple continues to move into the enterprise? >> you know, we clearly see the higher value subscriber base eroding. those are those enterprise customers in the developed markets. they're replacing those with lower customers in the developing markets. unfortunately there is erosion there and it is continuing in developed markets. and as apple and android phones move into developing markets, we expect that erosion to occur there eventually as well. >> finally, stocks just under $13. your target? >> our target is slightly above that level. we think there's obviously value in some of the parts of the company. we think they have a great patent portfolio and the messaging platform. we just think the device part of the market for r.i.m. is troubling. we don't think they're making profits there so that's the troubling part of the company. >> scott, appreciate your time today. thanks so much. bell's about to sound across
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as if adt wasn't enough to worry about state side, we got some miserable pmis out of spain, out of italy, out of greece, out of germany and out of frarnnce. >> we're getting evidence europe may be going into a deeper,
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harsher recession than we feared. that's really spooked the european markets today. it is one reason why we're down. it is all to do with that manufacturing data. a lead survey indicator. >> i think people get together, collaborate, talk about facts and analysis. >> so the bells ring us out across europe. you will see that we are -- it is very much a lot of red around but what is important to understand is the turnaround in sentiment that we have today. let me show you a chart of -- london traded yesterday but those that came back after the public holiday in europe today. they jumped at the open, as you can see. in fact, france and spain were up about 1.5%, as everybody got back and said look at the great data in the united states! then we got the data in europe. can you see the way, how it has basically dragged us down during the course of the session, look in particular where the spanish market is trading, down now 3% as we come into the close. it's not just spain, it is the
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italian banks that have been hit quite bad. let me take you to the bottom of the chart in milan. those big aeyitalian plays are negative territory. spain is clearly still the eye of the storm. central bank is looking at ways they can basiically get rid of the high assets in some way. they will make the big spanish banks and small ones realize the value of their losses, acknowledge how bad their loan books really are as property prices continue to fall in spain. that's why these guys are down again today. of course reuters reporting that they've asked the likes of goldman and credit suisse to help them as a government but actually those banks may stay on the sidelines because it is more profitable to deal with the m and a fallout from what's happening. we're even now losing some momentum in germany itself. you've had to rush into the bond markets. let me show you a five-year chart of where we are on bund
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yields in germany. you will see we continue to track lower as the movie moves into that safe haven. bear in mind the yield on the 10-year there is now 1.61%. so the rates are far lower than you have on treasuries, other 10-year here in the united states, and indeed today you've also seen again the euro beginning to shift. one of the great mysteries is why the euro remains so strong. i think we're now in our third day of declines for the euro. not unprecedented but it is certainly one to watch as we work our way towards the ecb. it is the last big televised debate in the french election. that's coming on sunday. sarkozy at 3:00 this afternoon will embark on what could be a make-or-break televised debate on two french-german channels. remember sarkozy needs to win over 1.5 million french voters essentially that voted for the far right in france. that's what they will debate today. not the economy so much.
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it will be about immigration in an environment where now a survey today suggests that 52% of the french public believe that there are too many immigrants in france. that then becomes the cutting edge of this election. >> it's not "american idol." it's "french eyidol" and one of them is going to get voted off. >> jamie dimon among the ceos of some of the top banks in the nation meeting at the federal reserve right over my right shoulder here. they've been arriving for about the last 45 minutes or so. they're meeting here because the federal reserve governor, the fed's point man on new banking regulation. he wanted to talk with him about the stress test. there were some concerns about how the fed was mud modeling loan losses for the banks. the banks ceos according to people close to the banks say they have some other things on
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their mine. they want to talk about new regulation and how it might impact not only their business but the economy. we caught up with jpmorgan's ceo jamie dimon. here's what he had to say about the meeting. >> i think it is great people get together, collaborate, talk about facts, analysis, all interested in having a great financial system and having the recovery get stronger. the better dwee here the better will be the united states economy. >> just who is on the guest list remains a mystery but we did see the ceo of state street go into the fed. the ceo of the rival bank, bank of new york melon couldn't be in attendance. morgan stanley's james gorman. others expected to attend include lloyd blankfein of goldman sachs and the ceo of bank of america.
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v mr. pandit is unable to attend. >> mary thompson in new york city, thank you for that. gary kaminski, our capital markets editor is here. we talk about carlisle already. we talk about lehman and now we're going to talk about chesapeake. >> obviously couple weeks ago when the reuters story first broke, we tried to make some of the points about those that had been both long and short chesapeake, both long and short for quite some time. i would point out a couple things. remember when this company was printing a lot of earnings? they called it hedging. it wasn't really hedging. they were essentially selling calls, taking into the premiums for nat gas at a much higher price than it was see lengthly trading at. this is a company that as many analysts you had in the 10:00 hour pointed out, there are a lot of things here that aren't new, they've been going on for some time. all of a sudden the market seems to be concerned with it. i'm just going to say this. when the history is written and this is opinion now, carl, history is written, what this is
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really about, we've seen this before, the difference between a public company being run as a public company and a public company being run as though it was a private company. that's really what it's come down to here. excellent reporting by reuters today in terms of the news of the hedge fund. i wouldn't be surprised to see more discovery, if you want to call it discovery, coming out about the way the lines between a public company and a private company were blurred here in my opinion, expect much more of the same, more to come out here. i'll personally be surprised if mcclendon can survive this. that's my personal opinion. again, opinion. >> if that happens, does that mean the company has to be sold? >> well, david faber had some great information and news about some of the people that are buying the stock right now or possibly buying the stock in the carl icahns of the world, those activist type investors. they will most likely try to create value bsh i would have to imagine, by first trying to figure out what is the company's
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value. what's the ultimate value here, i think you've got to figure out what this business looks like without that type of leverage piled on. but this is much like this call on here, sometimes these things just sort of become octopus. tentacles. i just feel like this is the beginning of much more discovery coming out in terms of the things that i have spoken to and i point out again, by people that have both been long and short this stock for some time. >> we should mention quickly here, linkedin's been having i.t. troubles. apparently we are, too. our top ticker is down, i'm told. we'll get it up as soon as we can. bob pisani is here on the floor of the nyse. >> nothing's working. >> let's go back to organics. by the way, 70 pages of call logs here. fine print. that's what this man's been going over this morning. >> amazing stuff. >> what a mess today.
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there is so much confusion about the global economic situation, traders are scratching their head. volumes are down because nobody's sure what's being done. right now in the whole global situation, let's get a tight shot. u.s. economic data has been confusing. that's a problem. april data is choppy. we still got 2%, 2.5% in gdp. china, the soft landing is still intact. we'll still get 8% plus gdp growth. that's where everybody's at now on that. you saw simon, great report from him. it's just deteriorating. germany's numbers going down on their numbers. that's a real concern this morning. their pmi numbers were weaker than expected. all this is a bit of a source of concern right now. real good news is earnings have been excellent and they're continuing to hold up really well. let me show you what we've got here. so far we're 70% through the s&p 500. 6.9% earnings growth. that's a very good number overall. that's what you want to see. it was 0.95% just three weeks ago. right near 7%.
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that's a nice surprise. remember, 70% are now beating expectations. that's good. normally 60%, 61% is the historic norm. here is your bright spot if you're looking for a little bit of optimism. here's the problem. it is going to get harder going on. next quarter we get a little bit of a pass. there's only 2% growth in earnings expected. we're going to beat those numbers, trust me. here's the problem. you see this number out here -- 16% for the third quarter? analysts are expecting the financial companies to start contributing. they haven't. now they're thinking in the third quarter they better start getting some more long growth and higher earnings expectations from the financials. that may be a serious problem. we don't know. how about housing? the good news on housing is it's bottomed but it's not lifrting off. all these publicly traded home builders that are at new highs, it is because they are getting a bigger share of the market. but just because they are getting a bigger share of the market doesn't mean the overall pie is expanding. finally, something about ipos. carlisle is not the hot ipo this
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week. the hot ipo is -- are you ready -- tilly's. not heard of them? not an uner hipster. tilly's is the hot retail site for teens, young adults, i encourage you to take a look. there's the site. look. carl and i are -- dreadlocks, we wear these on the weekends. >> your usual attractive young things in bathing suits. they have very, very interesting group of brand names that they got around them. bottom line is this -- 8 million shares at $11.50 to $13.50, talk is demand is much higher than that and they may rise the price quickly. >> the experience to date has been with these private equity firms, they open and immediately trade down. the objective here i think was to basically price it, get some long term buyers in there and try to change that experience which as we pointed out to this date has been a disaster. from different strategy going into the markets.
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rick santelli is in chicago with a special guest. >> hi, carl. listen, it is so for tuitousfor have the legal counsel representing some of the customers. beforehand we were looking at jamie dimon. jamie dimon is a pretty lucky guy. the government's done a whole lot for banks. if you have a question with your stress test, you get your meetings. mf people don't get easy meetings. matter of fact, jon corzine is an integral character in this novel. of course in another life the vice president called him a good friend and financial advisor. it is going to be hard to break that one. or if you want to look at mf in other terms, it seems as though if the money was owed by anybody potentially other than the relationship with their lead banking person, entity, jpmorgan, maybe it was exxon or mcdonald's or walmart that had their money, it may be a
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different issue. this is just reprehensible. it goes on and on and on and there's no answers. these people have gotten ripped off. >> yeah. we're trying to help them. i think one of our biggest obstacles is that corzine is one of obama's biggest funders. he's raised contributions that obama's kept. >> i understand that but the current whispers i hear in the hallways is they're almost more upset with jpmorgan right now. reason is there was an arrangement with a commercial paper situation whose net amount was pretty much identical to the first amount on halloween we heard of around $1.2 billion. can you explain? >> that's right. there was a transaction when mf global was trying to raise cash to meet their margin calls where they lick dayed $1.3 billion commercial paper to goldman. jpmorgan was the clearing and settling agent for that trade and media reports show that they intentionally delayed releasing the proceeds to mf and that's
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arguably one of the reasons why mf started using customer funds to meet their margin calls. >> i don't want to point any fingers, and hopefully some day they'll actually get working on this and get people talking that know information, but haven't gotten immunity, but in the end, is there anxiety well founded? do you think that the two main antagonists from the mf perspective, jon corzine and jpmorgan chase, do you really think that that -- that the money is there in one of the other of those entities can really put some more light on this? >> i told you in december at that pit that jpmorgan has at least $200 million to $500 million of customer money. they're in negotiations to return a lot of that money. they admitted under oath in front of congress that they have this customer money and they had requested three comfort letters to have mf global put it in writing to say that this wasn't customer money. they didn't get those letters signed and they have it anyway. >> i hope they're not pulling
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all-nighters on these negotiations because it's been since halloween. they'd probably weigh 63 pounds a copy. back to you, carl. a senior shareholder speaks as they gather for the annual meeting. we'll see whoo at he thinks of retailer's future after the retailer's future after the break.
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coming up, is chesapeake going to single digits? find out where one trader stands today. mastercard and visa in focus. commercial real estate on fire. are reits still the place to be? we're trading them with mort zuckerman. all that and more at the top of the hour. senior shareholders meeting this morning in hoffman estates, illinois where chairman eddie lambert is expected to speak. here's what he said last month in a rare television interview. >> companies especially in retail are finding themselves in the need of re-invention. jcpenney in the need of re-invention. sears in the need of re-invention. best buy recent commentary in the need of re-invention. that means that you're going to have to try new things. if you're unwilling to try new things and to fail and learn, you don't have a shot.
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>> todd sullivan, senior shareholder at rand strategy partners, runs a blog called valley plays. and paul swinand is also with us. todd, they're looking at same-store declines of 1.6%, 1%, you were braced for a lot worse. fair to say? >> sears was really hit hard for housing. sears is the numb per one appliance retailer in the u.s. kenmore is the number one brand and they do a large lawn and garden business. that's been hit and really dragged lower by the housing collapse. and people don't go to sears to buy clothes. if they're not there buying appliances and buying lawn and garden tools, they're not going to the store. so i think with seeing housing in the process of bottoming and starting to raise in some areas, i think you'll see that business
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pick up and the same-store sales declines will moderate or pick up down the road. >> don't forget, whirlpool said appliance use sales were down 10%. if you figure sears is 30% of the business, that negative 1% would be on a much bigger traffic decline, again if you take a linear correlation there. >> todd, this is really all about appliances and pricing getting a little bit better the first part of this year. you make the point, home depot and lowe's. if that trend continues they could get a lot more aggressive about store openings. i wonder to what degree then might sears be a sitting duck? >> i don't see sears being a sitting duck for home depot and lowe's. you look at news last month. i think maybe the month before. sears announced they're going to start licensing the three major brands. i think just the opposite could happen, you would start seeing craftsman tools and kenmore appliances in home depot and lowe's. i think you can expand the
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brands, expand their region, expand their market share which is bullish for sears. >> paul, color on the meeting broadly about your confidence in the company, confidence in avoiding a liquidity crisis in the next couple years? >> i think the liquidity crisis has been addressed with the numbers they've put up over the winter in the 10k. obviously now that they're executing on the spinoff and the inventory reduction, those are positives. but those at least expectations should have already been in the stocks. the thing i'm concerned about or what i'm hearing that's new here at the meeting, they talked a lot about really three things -- innovation, retail excellence and financial discipline.vation. there's a plan and it's good, but i think they're only in about 10% of the stores. i don't think that the changes that they're making are going to move the needle in 2012 that
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quickly. i think there's still some patience required in this stock. >> gentlemen, appreciate your time. busy day. we'll talk again soon, i'm sure. hsn out with its first quarter reports this morning. we'll talk to ceo mindy grossman in an exclusive interview right after this break. greetings from the windy city of chicago. 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®.
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multi-channel retailer hsn's strong performance continuing in the first quarter due to some solid online sales.
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hsn reporting eps of 44 cents, topping estimates of 37 cents a share. net income rose to $26.2 million, an increase of 29% from the year earlier quarter. joining us this morning for an exclusive interview, mindy grossman, the ceo of hsn. mindy, good to have you back. good morning to you. >> hi, carl. how are you? >> i'm good. looking through the quarter, seems like one of the main things i should ask you about is the growth in mobile which is what everybody wants to know no matter what your platform is. talk about how that's going to feed growth in the next few quarters. >> absolutely. it's really been about growth across all our digital platforms and creating both immersive experiences and great execution. mobile particular for hsn has been a key driver. we did over 50% of all of the mobile sales we did in 2011 just in the first quarter of 2012. the more people are using their devices, whether they be using them in tandem and second
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screening, so using their ipad while they're watching a live show, or taking their mobile device on the road, it really bodes well for the investments that we made in that experience and we've certainly consistently been seeing those results. >> the experience with the release of lionel richie's cd, can you talk about some of the lessons you learned from what has obviously been a huge success for both him and the music industry? >> absolutely. that really is a critical part of our overall entertainment integration strategy. again, it goes back to how can you create immersive experiences. with the launch of lionel's cd, we actually had a preshow on facebook behind the scenes. we had a live show on tv and then we had a post concert as well through facebook and we were able to increase our facebook fans by over 35% just in those few days. so very significant engagement. and we sold 20,000 cds in that
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hour. so in addition to music, which we will now be doing quarterly. our next concert is with josh turner in may, we've created great collaborative partnerships with the music industry. >> stocks having a decent day today in the midst of some broader selling, mindy. congratulations on the quarter. please come back soon. >> sure. thank you. >> mindy grossman with hsn out of tampa, florida today. final thoughts on the market action and a lot more after this break. ttd#: 1-800-345-2550 let's talk about market volatility. ttd#: 1-800-345-2550 in times like these, it can be tough to know which ttd#: 1-800-345-2550 way the wind is blowing. ttd#: 1-800-345-2550 at charles schwab, we're ready with objective insights about ttd#: 1-800-345-2550 the present market and economic conditions. ttd#: 1-800-345-2550 and can help turn those insights into ttd#: 1-800-345-2550 a plan of action that's right for you. ttd#: 1-800-345-2550 so don't let the current situation take you off course. ttd#: 1-800-345-2550 talk to chuck. ttd#: 1-800-345-2550 of how a shipping giant can befriend a forest
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take-away time. we get the non-pharm number on friday. >> i will sign the hat. this is awesome. good luck with the hat. >> good luck with the number, too. your take-away as you watch the market down 50? >> i think the market's sort of holding in there. i think this is -- this is -- for those in the bullish camp, this is some good action. we did have a conversation early about ipo. i'm told by those about tilly's, it's looking up five in terms of opening trade. on carlisle, it is

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