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tv   Squawk on the Street  CNBC  May 7, 2012 9:00am-12:00pm EDT

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we could figure it out. >> go ahead. >> our special thanks to warren buffett for a great three hours. join us tomorrow "squawk on the street" begins right now. good monday morning. welcome to "squawk on the street," i'm melissa lee with jim migrainer. let's look at futures. we are influenced by what has gone on over in europe, specifically in france, as well. taking a look. dow opening lower than six points. in europe we did see stocks fall to about 3 1/2 year lose on those elections. markets in london closed today for a public holiday. after friday's big sell-off in oil, got a check on the oil markets. saw oil friday hit the lowest levels since february. this morning we are seeing crude oil down 97.53. let's hit the road for this
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monday morning. we start off with europe. no to austerity. voters have spoken. electing candidates who might dismantle austerity measures. another turning point for european crisis? >> buffet is buying on berkshire hathaway. a modest 60 million stock spending spree friday. do you follow warren buffett in? >> countdown to facebook begins today. pricing for premium social ads continues to rise. >> disney's "the avengers" breaking box office. >> what is going on in europe is influencing the futures pictures here. voters speaking loud and clear against austerity. francois hollands e defeats
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nicolas sarkozy. we can't leave out what's gone on in germany with angela merkel's party suffering its worst defeat in about five decades. jim, piece this together. people are saying no to austerity and are concerned that spending will continue now and that europe will be in deeper trouble. >> i think it's the opposite. i think europe is rebelling against germany. this has been the house for germany, auto sales, anything they can tern to propriety has been fabulous. everyone now has been big losers. what i'm seeing is the beginning of the attempt to have growth too early. at least you see that this is like occupy wall street by europe. when the forces get martialed, the germans will lose, the rest of europe will win. >> that's the key question.
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particularly in light of what was sarkozy's and merkel's strong unity on a lot of these key subjects, and what may no longer be unity between france and germany. one wonders what will happen. we used to see them, sarkozy. i don't remember what the combination of the two names whied to believe. >> i think it's a great wrap. here is what i think everyone in america has to be faced. with they've got to devalue the euro. i just came back from ireland. i'm showing a euro here. this thing is way too valuable. i went with the idea of buying property. this thing is ruining the rest of europe. they can't devalue their own currency. iceland, at least you could get started with the recovery. ireland, houses are down 60%. i thought there would be something i could get there. wow -- >> especially not with a $50.
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>> true. the banks have no money, the governments have no money. austerity has clearly failed. >> i'll take that. >> the germans are keeping the value low. >> it's worth less today than when you bought it. >> as an american when you go over there, you find there are no bargains. germany, they are trying to have stability. you can't. it would be natural to think if you went to mexico with a boat load of dollars, bingo. >> this is the basic conundrum since the beginning of this crisis. inability of the country and euro to devalue instead of adopting austerity which resulted in great pain. now is showing something the public is not behind. big shock there. yet, we are faced with the same problem. a solvency problem. liquidity problem short term has been dealt with. i can't tell you how many hedge funds that continue to be very,
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very concerned. they are underinvested. we are lagging. this problem is front and center. >> in terms of the euro, 110 is the level it should reach. three-month lows on the euro. we've seen it come down, but nowhere near what a lot of analysts say needs to happen in the euro zone in order for this cushion to be -- this crisis to be cushioned, i should say. >> we have news right now. you've got a high yielding good growth technology company that is not that affected by europe. we've spoken with management many times. they have this conundrum. we must focus on spain, france, on greece. american companies are returning capital other than berkshire
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hathaway, by the way, returning nothing. american companies are returning capital that say i can't get any yield anywhere. i can, intel. i like that. >> at some point though there are some american companies, like an ibm, for instance, which does get, i believe something like 30% of its sales from the european zone. do you start getting concerned, jim? >> when i was trying to find out where i wanted to go in my career, you could go to mackenzie, mcbain, presidential candidate mitt romney. ibm has a way to fire people. ibm keeps doing these acquisitions. we had cognizant report this morning. cognizant is getting killed where accenture, s.a.p. and ibm are doing well. it could be a share take or cover to fire people where it's real hard to fire. >> we have the ceo of cognizant
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later this hour. >> talking about u.s. stocks and coming back to that. let's talk about warren buffett. mr. buffett making it clear he is still buying on the dips. >> we probably spent about 60 million. we try to buy maybe 10% of trades or something. when we were buying ibm, i used it day by day i would account for 10% of the trading. >> when they see it come down to the price points they like, they are not going above 10% of the volume. 60 manage on berkshire asset base, nothing, but at least he was in there. >> i found today's interview so compelling. >> that can't be right. >> that's a big hit.
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>> i find this is a really weird moment. when i go and talk to regular people about berkshire hathaway, they say something. the prostate cancer off the radar screen again. they say, he's old, he's ossified, set in his ways, the company is worth more broken houp. this is harrison. it said in pubs in dublin, believe it or not, it's said in odd places by people not afraid to speak what they regard as being the nonorthodox. it hasn't worked. the buying of companies, i wish he would show the discipline in buying up whole companies. he is touting we are out there to do a gigantic acquisition. have these added any value? >> you don't think burlington northern -- >> there's a lot of stuff that says burlington northern is doing well. i point to coal.
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guy made a giant bet on coal. how has that turned out? >> not good. the numbers speak for themselves. he had a magnificent track record over his decades, but in the past few years, it has not been good. year-to-date through friday, b-shares are down 3.5%, underperforming the s&p 500, five points in the past 12 months, annual average of 8% over the last three years. this has not been a good investment for investors. >> there isn't a soul in this country except people who are anti-taxes. i love his tax scheme and he is kind of like what lincoln was. lincoln was about trying to make it so the rich pay a little more. people forget that. >> and a republican. >> and a republican. what melissa is pointing out that is so important, it's a mutual fund that underperformed
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other mutual funds. it's an etf that underperformed. >> it's an operating business, a private equity firm. it's a lot of things. >> what's been working in this market? the great break-up of philip morris has been one of the most bountiful plays in the world. >> that's been the trend. it's all these companies unlocking value by breaking themselves up. >> that's the story. look at the wealth fortune brands created. sarah lee and kraft. the quarter wasn't that good. the stock keeps climbing. >> how much do we want to say --
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and you know what? he's created great value recently. how much do we love an icon who has clearly done right by america? >> give him more time. who knows? >> the board spends more time on succession than any other issue. to me that seems like a distraction. if i had a board of a company i invested in, i would not want them to spend most their time on succession. >> unless it's chesapeake. >> unless they need to. but if it's really a well laidout plan. >> it's note an insignificant issue. it's an important thing a ceo can do at the end of their tenure. a bad succession plan can be disaster. >> our friend doug kass talked about it this morning.
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he broke up teledyne. the next guy has to decide which ones are keepers and which ones aren't. there is a great moment in becky's interview. she asked him about procter and gamble. his response was couched. he kind of admitted and said he's been selling procter and gamble. the discipline he has towards the companies that don't do well or make mistakes in his stock portfolio is so different from his gigantic purchasing. who talks about how i can't wait to make a $22 billion acquisition? i can't wait for a smart acquisition. that's what i want. smart. >> sure he's not measuring things differently than you are? at the end of the day, he's got return on capital. he's got access to capital, extraordinarily cheap ability in so many different ways. are you sure you're not measuring perhaps success? >>em's measuring the world of intel which decided we are a good growth company.
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let's increase the amount of money we give back to shareholders. let's look at company -- >> you have been happy with the buybacks at berkshire. >> i think they are miniscule. we thought the autozone was terrific. >> that's one of the few that really worked. >> one of the few. i think the world of jamie dimon, but his buyback has not been aggressive. the other buyback that is aggressive is aig. they are buying a sunday night deal. that is amazing. watch this stock. it's going to be big today. my charitable trust, we are saying this is going to come in and buy it. >> friday we were here watching those shares down there was speculation perhaps treasury would come in. we did hear it to the close they would. $5 billion. $2 billion repurchase, buy aig. all treasury has behind it is
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$37 billion worth. that's nothing. >> a billion share overhang. that is nothing. >> the ceo of the year so far, generated a lot of cash flow and was able to use that without selling off assets. >> and they are maintaining price. >> did gm buy stock on the gm deal? >> government has to be under water in gm. different than the break-even is roughly 29. any time you get out above $29 and this was $30.30, you're looking good for the u.s. taxpayer. they want to sell as much as they can. >> great for us. you buy this at where? down 7%. that may seem good, but the government has to unload a billion shares still. >> so far, so good. earnings still triumph. aig versus buffet's berkshire
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hathaway. the numbers came down this morning. what is going on with aig earning estimates? they are going higher what business are they in? nfrn we need to evaluate benmosche. >> why note buy one without a billion dollar overhang? >> it's worth much more. >> we talked about mr. fishman who runs travelers. his earnings versus prudential's, shocking. >> just paid both my bills, homeowners and car from travelers. moved from geico. >> 15 minutes would have saved you. >> apparently not.
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>> what did you take a half hour? >> they don't tell you as they move your rate up and you go why am i paying $2,000 for car insurance when travelers will give it to you for $1,000? >> are you a risky driver? >> not at all. i'm in that sweet spot. no accidents, perfect age, no kids driving the car. they should pay me. >> we've got to take a break. facebook's pitch to investors, the social networking giant looking to start things off with a bang in its ipo road show. another look at futures as we set up this monday morning in wall street. s&p 500 losing about six points at the open.
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facebook kicks off its road show this morning. more on what we can expect from facebook. kayla. >> i'm outside the sheraton where that pitch will take place midday. facebook management making a case for investors and fielding an intense question and answer session following that pitch. i was able to sneak a wick peek
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this morning during the set-up of this road show. it looks like your traditional road show. big stage where management will be presenting. screens where they will do facebook demos and replaying some portions of their presentation. some 400 investors will pack that ballroom. i'm told there is a security staff of 30 people that will be guarding today's event. no doubt because of the star-studded nature of it. at today's event, valuation well be of utmost concern. facebook erred on the conservative side even at the top of the offing, offering the most shares it possibly could, it would be valued up to $96 billion. when you think where analysts are coming out, they think best growth is yet to come. wedbush announcing a price target of $44 a share which would amount to a $119 billion valuation.
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ever core saying that could be up to $160 billion by the end of the year or in the next 12 months. as far as that price target and growth, that will be the main question here today. >> another main question, what is the aftermarket performance going to be? >> i think it's important to think about this as a 12-month price target. facebook in all its filings said in the six months following the offering, that's when it will take the big charges, when employees will be cashing in those restricted stock units. we saw zynga take a hit as it started to incur those charges. on the back half or beginning of next year is when some analysts say after all those charges are taken will be the telltale sign for growth if that happens as
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the beginning of next year. >> kayla, thanks very much. >> i see two schools of thought developing here. one is facebook could be a juggernaut as a company. the other is the ipo could be a juggernaut. one's good to have facebook be a juggernaut as a company. the other is bad. >> it is a juggernaut as a company. >> that's good. the more we talk about it, the worst we make it. >> because we are setting the bar too high. >> yeah. linkedin goes up back where it was, then goes down. maybe the way to approach facebook, i'm going to buy 15% where i can. obviously we get on the deal, that's so great. then wait for it to come in. if it doesn't come in, so be it. >> you know what the eery thing is, last year we were talking about a big run in the stock
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market, then a pause, last year was linkedin, european crisis resurfacing. what happened last year after this? was a market decline. >> i don't like the win/win notion of a $40 target. that allows you to say, it opened at $40, came down to $5. i'm going to reiterate my 44. i would love to have it both ways sitting here. when i'm right, i'm wrong, when iwhen -- when i'm right, i'm right, when i'm wrong, i'm still right. >> cramer imad dash is on deck. take a look at futures. lower expected. it's very important to understand
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it's time for cramer imad dash. >> this may be the first real hope for us. this helps breathing. some people are saying $4 billion drug. my friend is saying that could be conservative. i've got to tell you, this is a huge breakthrough. >> $4 billion, 75,000 sufferers? >> i know. rep what people paid for hepc? >> good news story all along. opening bell after this.
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♪ let's get it started in here the opening bell on this monday morning. the legal aid society over at the nasdaq. mela device kicking off skin cancer and prevention month. when we left crude oil was at $105 and here we are at $97. what's going on with that? >> this is tough. i have to tell you i think -- i want to say something about where we are in terms of the market. why i don't think this is stocks good, stocks bad. oil going down is the single biggest and best thing that could happen to the stock market. but anyone who is affiliated with oil in any way, whether it be joy global which is coal, caterpillar which is shale, they are bad.
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look at procter and gamble. this is my favorite whipping boy. we have warren buffett saying bad things. why isn't the stock at $60? kimberly-clark almost hit a 52-week high. these are remarkable moves when you look at colgate. they are buyers of commodity. this market is signaling look out. commodities are going lower. it's why i like retail. >> you think they are going to use the savings from the gas pump to go to, i don't know where, the gap? >> yes. to the gap. to home depot, lowe's. >> an upgrade. >> disney's theme parks. when you couple that with "avengers" you've got a suddenly positive story. >> disney is up 1.7% on this. what was it down on "john carter?" >> very little. i don't remember it being down at the end of that week. >> i don't remember "john carter." >> that was the problem.
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>> we never caught that. >> it probably skipped on-demand. they would probably pay to you watch it at this point. >> if carter had come later and "avengers" had come first. i talked about this with bob iger. he's the ceo. the notion they should stick with tried and true brands. "avengers" is tide. when you do "pirate of the caribbean," it's head and shoulders. you put money behind your franchises, not "john carter." what bob iger is learning, we'll watch any variation of any theme park character. but we will not introduce a new one. it's very interesting. full disclosure, we work for comcast. one of the things mentioned in the disney upgrade this morning, universal is doing quite well and it's bringing customers to disney. remember, it used to be the
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opposite? >> the theme parks. "harry potter" has been a game changer. >> have you been? >> i have been. >> how amazing? >> very crowded. >> something i have to look forward to. >> the 3-d reality stuff, those rides and i are not getting along that well. financials are mixed to up right now. certainly yesterday with the results in greece and in france over the weekend there was anticipation of significant drop in the market p. i would note financials now are all trending towards green. even morgan stanley which broke below $16 after being as high as $21 recently, a stock we talked about often. >> they tried so hard. >> it's the moody's downgrade. that is weighing on all these financials. we should remember that. in particular, morgan stanley. >> weighing on wells fargo. >> i should say worries about a moody's downgrade. one has not occurred.
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what it will do to their funding costs and cost them overall. >> i continue to see the bb&ts of the wells fargo. to circle back to warren buffett, he was bullish on housing. he's been bullish on housing throughout the bubble that he can get away with. the bifercation continues or you can ride wells fargo, invest in it. >> the spanish banks are doing nicely. santander. >> there is report spain's prime minister is considering pumping government money into the banking system. one thing a lot of countries are talking about is good bank/bad bank. banco santander is too big to fail. do i want to own it? one of the things we have to remember, you could have owned citigroup throughout this. the government ended up owning citigroup where. did that get you?
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you could have owned aig. i urge people to recognize in the end, these banks, someone has to crunch the equity. i just saw something that shocked me. did i see a stock called apple up today? is that possible? >> it is finally up. it is $567. >> i'm speechless. >> it has been a rough road for apple. >> the government sold $5 billion worth of its shares. >> david, you and i are going down to the wireless conference. >> yes, we are. >> a lot of talk about whether at&t and verizon have been trying to take more share, mine share and money share from apple.
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>> let's touch on annie's. analysts are able to initiate coverage. >> what a life cycle. >> it's up 2% today. >> people aren't thrilled from the pullback. i have hain on tonight. people feel this is the good housekeeping seal, i will not get sick, i will not get fat, i will not get a horrible disease if i eat hain. >> if you eat that annie's mac and cheese, you will get fat. i made plenty of that for my kids and it's delicious, but it's no doubt fattening. >> annie's with a healthy dose of guinness stout with the pint? i visited the guinness factory in ireland, that is a very different tour from the hershey's factory. >> let's go over to a man who enjoys a drink or two, that is
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mr. pasani. >> were you at james gate? the greatest pubs in 2 the world. as you come out of the guinness factory there at st. james gate, there is a series of pubs along the road. they are historically serve the best guinness because they are the freshest guinness in the world. >> i visited every one of those. i was clearly overserved, but i wasn't driving. >> the important thing is for some odd reason, the guinness here in the united states just tastes different than ireland. they insist to me it is the same guinness everywhere. they go up and down. >> isn't the water different? it's the water. >> and the pasta in italy is better. >> they're bringing it in. >> i did learn how to pour. that's one of the things you learn at the guinness academy. it's a 45 degree angle and they use spoons in america. that's wrong. what am i doing?
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>> pasani, we were talking about europe. >> what happened to the great disaster yesterday we were predicting? bob, this is going to be a terrible down day what a mess, did you see greece. what happened? where is the horrible disaster? everybody is talking about the socialist candidate, the french president now like he's an old friend, like a slightly eccentric uncle. the socialist. everybody is happy all of a sudden. why are things so strange? why are we back to normal? french legislative election are coming up. why aren't we down so much, what happened people are thinking maybe they will be moderate there. the socialists control the senate in france. elections are june 10. the presidency is over. the local elections are going to be more important. also nobody i talked to this morning thought suddenly the ecb
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was going to start printing euros. this is not the start of some kind of effort out there at monetization of the european debt. mr. hollande is not going to completely realign the franco/german relationship. that is the idea behind the decent day we are having. french banks are on the up side. different is the greek situation. that is more worrisome. the two parties that support austerity, socialists and center right party have 1/3 of the votes. now they've got the shaky coalition they've got to put together. here is why it's worrisome. in june there's reviews up of the austerity deal. they are likely the parliament is going to have to vote on additional cuts in the budget. the parliament, the shaky thing they elected will vote on additional cuts in austerity. i don't think so. that is a major problem in just about a month and a half.
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why isn't the markets down on this? how come the earth isn't quaking that the greek situation is a lot less stable? people think they might muddle through or greece truly this time is not as important as it used to. jim, let me point out merkle yesterday lost in local elections. lost a majority rule for her christian democrats. we've got elections in italy today. that will be a referendum on monti and his plans for enforcing new changes in the italian budget. we'll see what goes on. back to you. >> austerity has failed. people are excited to see something else. we always in america get scared when we hear socialism. as good as socialist rubric, who's been the best at growth in the world? the communists. let's not be so quick to judge that the socialists may not be so strong.
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let's shift to the latest news in energy and go to sharon epperson at the nymex. >> every trader was talking about how ugly the session would be when oil prices got to that $95 handle in the overnight session at the open. keep in mind we are now around $97 a barrel. they are keeping a close eye on whether oil retests that 200-day moving average. it is what has happened in europe over the weekend that caused a great deal of uncertainty in the market. there are fundamental factors traders point to. the fact we are looking at opec supply levels that will continue to build. keep in mind the sell-off we've seen. gold prices holding relatively
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steady. >> thank you, sharon epperson. time for a delve into m&a these unsolicited bids going nowhere. a list for you to go through. many of them not particularly large. you may have seen this one. take a look at what happened to the stock. prestige brands had a just say yes defense. it said that's not quite high enough. come back with something and we'll take it. it's inadequate. really, we want to talk. genoma said we'll see you later. bye-bye. stock at $13.34. then you had westlake and georgia gulf. started at $30 a share. 4.8% of the stock, sweetened to
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$35. when they sweetened, no path. they weren't going after the board. weren't doing all the things you might do if you were a true hostile bidder. their strategy? we want shareholders to pressure them that. worked really well that never had a chance of working. they dropped over the weekend. leo strine, our favorite chancellor in delaware, martin marietta, when you came hostile for vulcan and divulged things in your confidentiality agreement, you can't do that. you're suspended for four months. interesting decision. his are always worth reading. he writes well.
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>> you've got to be careful. here is what judge strine had to say. martin marietta was bound to retain confidentiality. they breached that obligation by broadly using transaction information and the value of material to sell its hostile bid. >> take away for people at home, you are not arbitragers. sell, sell, sell. >> satellite imagery company digital globe rejected $17 a share unsolicited offer. one of them is in danger of losing government contracts. they provide a lot of satellite imagery. gui made this bid and said get out of here. we are not interested. by the way, we reiterated other interest not acquiring you on
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the terms of some of those we previously offered to you. going nowhere. >> sell, sell, sell, including avon, sell, sell, sell. >> we missed you last week. >> thank you very much. >> cognizant technology taking a big hit on news of its outlook. it's down 14% right now. we've got the ceo. between listening to the numbers... ...and listening to your instinct duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. we believe the more you know, the better you trade.
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duff & phelps finds the sweet spot that powers sound decisions. duff & phelps financial advisory and investment banking services. cognizant reporting first quarter results this morning that were in line with estimates. the company is saying it is more cautious due to softness in its north american business, especially in banking and pharma took down its full-year outlook. shares of cognizant are up about
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9%. today they are plummeting by 15.5%. here first on cnbc is the ceo francisco desuza. >> good to be here. >> i want to get color on commentary you made. you are seeing slower than anticipated demand as we enter the quarter. has that persisted to date and where is that weakness coming from? >> we had a solid first quarter. a normal seasonal pattern for cognizant, we would expect to see an acceleration of growth as we wrap up the first quarter and come into the second quarter. while this year we did see that acceleration, it was not to the level we would have expected given where we were previously expecting the full year to turn out. we decided to take a cautious approach and reduce our full year outlook for the year. >> what are you hearing from your customers as to why that slowdown is happening?
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a lot of other analysts saying we are going to come up on a fiscal cliff, is that part of the reason? >> we are seeing the lack of acceleration principally in two parts of our business. first is in the banking portion of our financial services segment. the other is in the pharmaceutical portion of our health care business. what's happening in those two industries in particular, as you know, those are two industries that are under a considerable amount of pressure right now for a variety of reasons that include macroeconomic reasons, cyclical changes and secular changes in those industries. our clients are slowing discretionary spending in those industries, taking a more cautious and wait-and-see approach to discretionary spending. we are seeing the weakness in those two principle areas of our business. >> i'm struggling here. s.a.p. which i follow closely,
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accenture, ibm, they are saying it's necessary to hire them. all of them said the areas you're citing weakness in have been strengths. naturally, one may conclude you're losing share. i don't want to say that. that is something someone might say. i would love to hear your comments on it. >> it's very important to put our results into perspective. we grew faster than any of our peers in the first quarter of this year. our revise outlook at least 20% year over year growth for the full year is at the top of our peer group. we continue to believe we are growing faster than the industry, faster than our peers and taking market share. while we are disappointed we took our outlook down a little bit as a result of this lack of acceleration we saw coming into the second quarter, we are confident in the strength of our business model and the fact we are taking share considerably as we go forward. >> you are saying the stock down $10 is ridiculous.
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who did you take? give us some names. if you give us some names, i would feel more confident about this share take issue. >> when we look at our primary set of competitors, we look at the global firms, firms that provide software services around some of the firms you mentioned. for example, we have a solid business in implementation of s.a.p. we look at the global i.t. services firms. firms like s.a.p., excuse me, like accenture, firms like ibm. that is the center of firms we compare ourselves with. >> to the extent you cite secular changes in banking and pharmaceuticals, are there secular changes in their ability to spend money on your services? >> i think any business that goes through secular shifts goes through -- or any industry that goes through secular shift
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represent as long-term opportunity for us. as our clients go through secular shifts, in general they need to deploy technology in new creative and innovative ways. that is where cognizant can play a role. >> you gave us a list of different factors. is this regulation, changing industry here, the elections coming up, the uncertainty of the elections and regulation? what are we talking about? >> i think it's a combination, in those two industries, a combination of underlying industry dynamics like the patent cliff in the pharmaceutical industry and regulatory changes as we are seeing in the banking industry. >> francisco, thank you for your time. >> great to be here. >> francisco dsouza. >> we don't think of drug companies that need to cut back spending. >> he clearly countered your assertion they might be losing
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time for six in 60. pepsico. >> commodity costs going down. buy, buy, buy. >> carnival, downgraded to neutral buy at goldman. >> this is a european play. good call. >> newell rubber maid, upgrades. >> exact opposite of warren buffett. buffet is continuing to buy. >> sysco. >> talking about inflation coming down. i want to see the proof. these guys have not executed well. >> dish network. >> they are costing too much. this is like netflix. these are important issues we'll cover. >> leap wireless, from sell to hold. >> is it ever going to comeback? probably down enough. >> metro pcs tried to merge with sprint. didn't happen. >> we'll be kicking this stuff
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around. cell phones are everything, but are they done? >> mobile figures into everything, including things like facebook and everything else. >> hain tonight. if you like annie's, maybe you'll like hain. this has been a disappointing play on oil tankers. is there a bottom? we'll find out. >> he's tougher than i am. he does the show, gets on a plane, shows up in new orleans 1:30 in the morning. >> i'm not tougher than you. we are a good team. we are all a good team. >> we'll see you later. >> thank you. look forward to seeing new new orleans. >> as do i. [ male announcer ] every day, the world gets more complex. and this is what inspires us to create new technology.
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welcome back to "squawk on the street." buffet says buy. berkshire hathaway adding to its holdings of two u.s. companies and dropping about $60 million in stock this past friday saying equities are attractive long term. should you follow the oracle in? >> and we'll hit the high seas this hour, the ceo of royal
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caribbean international to talk summer travel season. the health of the consumer and business after the "costa concordia." >> facebook's road show officially getting under way today. should you believe the hype? one analyst says the face of advertising is about to change for good. intel announcing it will increase its dividend by 7% or 90 cents a share on an annual basis. clocking in as the third dividend increase over the last 18 months for the tech company. >> yahoo negotiating to sell a 15% to 25% in alibaba. the current plan which yahoo would pay taxes on its gains from the sale is simpler and more doable than a previous effort to structure a tax-free transaction. >> touch on crude this morning paring losses after earlier slid down to that $96 level on the back of key election results from greece and france. citi commenting that the underlying fundamentals have
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been weakening for some time now. we are down more than $1. this is the lowest level in quite some time. >> still people haunted by the jobs data we had on friday and reassessment where we might be going with u.s. growth. you saw it in asia trade overnight. you saw it in europe with many of the earlier losses. >> a reflection of the worry about softness in the u.s. economy and fall of that key commodity, so important to helping so many companies, particularly on their margins and helping push the economy up if consumers have more money in their pocket because they are spending less at the gas pump. things of that nature. >> what is positive for the markets today, losses seen in the oil stocks aren't nearly as sharp as the losses we've seen in the last couple of sessions. particularly friday when we saw oil stocks trade down heavily with the markets because of the fall in crude. we are seeing the energy stocks down by just about 0.5% on xcel. >> today is an odd day in
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reaction to europe. >> it is. coming in this morning, we thought we would see a significant down day. the market reassess necessary some ways. let's continue to try to do that. voters speaking out loud and clear against austerity. let's send it over to michelle caruso cabrera who has the latest from that complicated picture out of greece. >> it is complicated. it was a surprising result. maybe not surprising, to your point, the parties that supported the bailout and pushing through the bailout measures were punished in this election. we saw the greek voters choose to push their support to the more extremist elements on either side of the parties within the election. i think the best way to describe it is if you supported the
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troyka plan, the voters punished you. if you didn't support p it, you got more reward. what is the big surprise is the second place winner. it's a communist party. the leader, i interviewed him several months ago. he had a very small position in parliament at the time. he struck us as someone we thought could go places. he is a communist, but he supports the use of the euro. he doesn't support the current plan. he does support more state control of all the resources within the country. he did not want to give us an interview with english, but he does speak english. we hired a translator. as we are doing the interview, he suddenly breaks into english. was very determined to speak in english about one thing, warren
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buffett. >> this is the main problem, who will pay the crisis? who will pay the banks? do you know what buffet says? >> yes, i do. he said, oh, come on, let me pay. why did he say that? he said that because he can understand the danger really. for his class. >> he believed if buffet believed if the rich didn't pay more, the pro libertarian would rise up. he was absolutely definitively aware of who warren buffett was, is and the buffet rule. back to you guys. >> so interesting.
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we assume that victor in greece may have been following it closely. becky quick sat down with warren buffett. >> more on what michelle was talking about, the buffet tax. buffet did mention some things about the buffet tax to us this morning, the buffet rule, as it's called. saying he thinks it's something that needs to be done in the issue of fairness. he didn't go so far as to lay it out the way greek politician did, that his whole empire would fall if there was a revolt from the prolitarian. but you need to have the richest people in america paying at least the same amount as some of the lower members, people who make a lot less money. he was saying at least 30% for people who make over $1 million, 35% for people who make over $10 million. it's getting play around the world. more of the things this weekend included topics like gold. that is something warren buffett and his partner have spoken out about saying they think there
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are better places to put your money. we talked to a lot of people about that including bill gates who is a director for berkshire hathaway. listen in to what gates said about that in terms of how he agrees with buffet and munger about gold not being the best place to invest. >> gold is a tough one because it's so psychological. central banks or the imf ever decided to take advantage, and i think countries need liquidity, hey, there is an asset that is not doing anything for the citizens. then because it's purely psychological, it's not like people say, when it gets to $800 an ounce people will buy four times as much jewelry. there is no, nothing that steps in as a buyer at any price. it's just purely, oh, other people think, other people in the future will think it's worth more than it's worth today, which if you think the world is
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scary and people are going to panic, i'm not saying that theory doesn't exist. >> warren buffett when he spoke with us this morning here at the hollywood diner, said that he gets it. he thinks people are right not to trust currency. he doesn't trust currencies himself over the long haul. he did say you're better off putting your money in other areas. he doesn't think gold will profit from that. we talked about some of the other news headlines this morning. with facebook rolling out its road show. first day of the road show this morning. buffet is not planning on buying any shares in facebook, but he wouldn't short that stock. >> i'm agnostic on a company like facebook. it's an extraordinary business. they are the hardest ones to value because the question is whether five or ten years from now they will be as extraordinary as they are now or they may keep doing more and more wonderful things. it's harder to figure out than
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say coca-cola. >> we were watching the futures with mr. buffett all morning long from here at the diner. when we started off, the dow was down by more than 90 points. later it got down 75 points below fair value. he was cheering it down, down, to come up with a lower dow at the open because he said as you mentioned earlier, he's going to be buying stocks today the market. he spent about $60 million in stocks on friday. he plans to buy two issues today. he said he would be adding to long-term holdings he's been holding on to. the lower prices go, the more he'll get for his money. that is why he was not perplexed by lower prices this morning. >> david, jim and i in the 9:00 hour had an extended conversation about warren buffett's recent track record. he's a long-term investor so maybe it's unfair to take a look at his shorter term returns. berkshire hathaway underperformed the s&p 500. did he get any criticism at the
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meeting about this? what is his response to this article? there is an article in "wall street journal" highlighting this very issue. >> he didn't get criticism, i wouldn't say from the shareholders. he did get questions brought up about the performance. we asked him about that this morning, as well. his point is there are going to be times when the market undervalues shares and overvalues shares. he seems to think shares are undervalued at this point. earlier berkshire hathaway started buying back stock. they laid out the perimeters where they would buy it. that is an unusual move. they never wanted to do that in the past. they have been buying back the stock. there was an interesting interchange with someone who is very interested in gold over the weekend. they said you should be putting your money in gold instead. he shot back, with he we started berkshire hathaway, berkshire hathaway was trading at $15, gold was trading at $20 an ounce. gold is at $1,600 an ounce and berkshire hathaway is $120,000.
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>> take that. >> becky, thanks so much. great time with warren buffett. tremendous interview this morning. let's get insight on the berkshire meeting. jeffrey matthews is a berkshire hathaway owner and author of "warrant buffet." and james altucher, author of "trade like warren buffett." you say there were dozens of questions about the guts of warren buffett's business. that is a change why. do you think that change happened this year? because of the recent underperformance of the shares? >> it's a combination of that and the fact he had three analysts asking questions at the meeting. those analysts were all insurance analysts and they all focused on the guts of the business, which is in insurance. it was very unusual. it wasn't warren buffett the new
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age spiritual guide people always went to to ask questions about what should i do with my life? it was warren buffett the analyst. it was very interesting. >> i'm curious what your take away was? >> i think it's like the guy who came in the number two in the greece election that it's not just warren buffett the analyst, it's warren buffett the communist. he is using this conference essentially as a religious pulpit to express his views on what everybody else but him should be doing with their money. >> i wouldn't think of warren buffett as a communist. sort of one of our greater capitalists in many ways. >> but when he is saying everybody should be giving more money to the government, everybody should be doing this with their money that, with their money, i wish he would keep his hand out of my wallet and i promise to keep my happened out of his wallet.
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>> he says i'm a citizen and i care about my country. do you figure any way it's figuring into sentiment about berkshire itself? >> i absolutely do. i'm not criticizing him for it. i think it's a fact. if half the people in the country really disagree with him, they are not going to think very highly of his stock. that's the way people are. it's more of an emotional approach to investing. if you're going to be emotional about it, invest in fox, which got a good laugh. the fact is people are emotional when they invest. it's something warren buffett doesn't approve of. he's very rational. that's the secret to his success as an investor. it is a fact. >> and yet times are changing, jeff. i thought what was very interesting today with becky is that he revisited the idea of whether or not berkshire should pay a dividend, which there were
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questions, as you know better than i because you were there. he said they would discuss the concept of a logical dividend policy in the annual letter next year. it seems to me for a lot of berkshire or buffet's natural congregation, that the times have changed with the feds doing what it's doing to interest rates. increasingly, they do need a dividend from the man. and maybe he will have to go with that and perhaps change the way in which he operates in that degree at least. what do you think? >> i absolutely think you're right. he's getting pressure because of the underperformance of the stock. i don't think i heard questions like i heard this time. what can you do to juice the stock was one of the questions, and could that be a dividend? he does respond to people's
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concerns and questions. he will talk about it. >> i want to get back to you. your book was titled "trade like warren buffett." >> i want to buy berkshire hathaway, but i would view warren buffett as my unpaid intern. i would look what warren buffett is buying. he is buying ibm, intel, directv, these are recent shares he added significant stocks and i would buy those. that's how i would get the benefit of warren buffett's massive intelligence but not pay him a single dime. >> warren buffett today said he is going into the markets adding to positions in two of his u.s. companies. knowing what you know about him, which companies would you be adding to at this point? >> i would add exactly the companies he most recently
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added. ibm and intel, technology, directv, wells fargo is the one bank he thinks is the best bank out there and cvs because of aging baby boomers. it's going to be servicing their needs. these are the five stocks warren buffett is buying that i could buy at more flexibly and more nimbly than he can. >> gentlemen, we have to leave it there. thank you for your time. >> thanks. >> this brings us to our "squawk on the tweet." puts the oracle of omaha straight in the hot seat. is that a reason for you to get off the sidelines? if so, tell us why. if not, why not? tweet us. >> up next on the program, facebook's ipo road show officially getting under way this morning here in new york. what's the mood amongst investors? what are the top questions the potential buyers are looking to
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ask? would you be a buyer? do you think it's priced to go?
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facebook ipo road show officially getting under way today. kayla tausche is in new york city. >> they will face their most critical and important test pitching this deal.
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there is only one person invited from each wi-fi shop, it's a wide cast of characters at the event. we imagine the bells and whistles are put together by this time. we did get that picture up for you as far as what they were looking like in the early morning hours as far as the production crew. as far as the deal, what facebook will be pitching, facebook is set to raise $10.6 billion at the mid point of a $28 to $35 per share price range. half of those proceeds would go to facebook. only about half of the deal would be primary shares. the rest are being sold by secondary or earlier facebook investors. about 337 shares all together $2.7 billion shares total for the company. this represents a float of just about 12%. with that deal on the table, no doubt facebook management going
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to be fielding a lot of questions, particularly about that valuation, up to $96 billion and how that compares more conservatively with analyst estimates that have come out recently. questions about growth. is it not only sustainable but predictable on a growth curve? acquisition strategy. is there any clarity on what you can expect as far as expansion and who will be controlling that process? up until now it's been completely a mark zuckerburg-controlled game. we don't know whether we'll see mark zuckerburg at today's presentation. i'm told security detail is 30 people strong. 30-person security crew. >> good luck in the scrum, kayla. >> it still makes it much cheaper than linkedin. we are hitting the high seas to sit down with royal caribbean's international ceo.
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at the nasdaq with courtney reagan. >> thanks, david. take a look at shares of vertex. up over 44%. we've seen it go higher after interim results from a phase two study of a drug with positive results. groupon, shares up almost 6.5% from the daily deal site. ceo putting out in his annual letter shag the recent bumpiness this company has seen is a result of rapid growth. investors are buying into that today. off about 40% from the ipo price. take a look at shares of first solar down 1% sitting down at all-time lows since that ipo. obvious concerns about the strength of the recovery, we are
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taking a dive onto the travel and leisure industry. >> any honest conversation about your industry has to start with the "costa concordia," the terrible tragedy we had in italy. not your ship or your line, but you have in a delayed reaction your second and third quarter bookings are going to be down. what is the latest on that? >> we've seen the business come steadily back from a tragic event that was extraordinarily rare with a which is with a great safety track record. this was a very significant event in the industry. in general, what we've said is that the business is coming back at a faster pace in the north american markets than in europe as a general rule. >> so there is a stark contrast
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between america and europe? >> stark contrast might be strong, but clearly the united states market has been in faster recovery mode since the accident took place in january. >> how do you deal with that? you've got 22 big ships in your division. presumably you can sell them anywhere. do you sail them to areas with higher demand, australia,ing new zealand, away from europe? >> we are fortunate that the business diversified. we have "voyager of the seas" on her way to be permanently positioned in china and australia. she is on her way to singapore right now. the latin american market has been growing. all the major regions of the world are contributing to the growth of our industry. while europe is a very important part, it's just one of the regions. >> we see oil under pressure again today. that's been the story now for the last couple of months. is this -- these lower fuel costs are obviously important to
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you. how do you hedge? i understand you guided down the full year specifically on those fuel costs. >> yes. royal caribbean has been involved in a very systemic hedging program for years. typically we are 50% hedged for our oil purchases going two years out, which has served us very well during recent years where generally speaking the price of oil has been going up. we are also buying 50% at current prices. as you say, that is what influenced our guidance at the last earnings call. slightly down for the year as a whole. overall we think we are well protected with our hedging strategy. >> your management strategy is to take the older ships and double or treble the dining offerings you have for your passengers. at the same time extend the dreamworks collaboration so that it's more how to train your dragon events for the kids. what is the cost at the moment for you and how do you see the
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payback? >> the revitalization program we are engaged in, which will take place over a four, five-year period which we'll address 15 of our older ships and give them the kinds of fantastic dining and activities features we have on the new ships is clearly a significant capital investment program for the company. because it's spread over a number of years and it's such a revenue-driven business, we need relatively small increments in revenue yields year over year basis to have a very good return investment on that type of program. the revitalizations are key to what we are doing. we are able to bring in fantastic relationships. we are enthusiastic about what we are doing. >> for you, this is the year that could have been, but for long-term investors, it's about
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2013, 2014 which is what you were saying. thank you, adam goldstein in miami. >> analysts deciding not to wait for facebook's pending ipo. several price targets on the social media giant above the $28 to $35 price range for the ipo. we'll sit down with one of those analysts next. like in a special ops mission? you'd spot movement, gather intelligence with minimal collateral damage. but rather than neutralizing enemies in their sleep, you'd be targeting stocks to trade. well, that's what trade architect's heat maps do. they make you a trading assassin. trade architect. td ameritrade's empowering, web-based trading platform. trade commission-free for 60 days, and we'll throw in up to $600 when you open an account.
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welcome to the world leader in derivatives. welcome to superderivatives.
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one of the most remarkable things to observe is the way the futures indicated. we had a rough night overnight. dow industrials down 65 points. consumer health care not doing as bad as other sectors. it's not the major move you might have feared going into the weekend given what happened in france and greece. let's look at the breadth of the move down here at the nyse, now an hour and four minutes into trade. it's 2-1 decliners to advancers. the nasdaq, you can see it's perhaps not quite as severe. >> i'm sure you're watching the greek and french elections over the weekend. are you surprised at the market
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reaction today that we aren't as deeply in the red as maybe we expected yesterday night? >> no. i said on this program last week traders were more concerned about the greek election. i think that was borne out. i think you're seeing the election in france was not unexpected. polls indicated that. that was baked in the cake. the french market turned better the last time i looked. the greek market, they are getting a little bit of a buy. i don't think that's going to work out well. a couple of things are happening. there is no immediate event so you don't get a sense of panic. you only get concern. you may get a little bit of a lift that they wind up forming a government. i think in the long run it will not work out well. >> in a sense you kicked the can down the road. it's so bad you have to go back to another election next month. >> it looks very much that way.
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whoever they get in won't be able to put together a package of austerity. they will postpone payments or not pay at all. it doesn't look like it will work out well, but there is no crisis now. >> spanish yields well below 6%. hard to imagine we are not going to revisit this throughout the summer. are you surprised at the movements in the markets? >> no. we shifted to concern out of panic. we don't have anything immediate in front of us. if you look at the greek 10-year, last time i looked they were yielding 23%. >> that's one or two points higher. >> right. let me ask you about the u.s. economy. a huge amount was written about over the weekend, whether or not we are storming on the recovery here. now that the dust has settled from the employment report, what is your view? >> i am concerned about the potential for a double dip.
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we've been using this weather excuse all the way through. now that we are in the merry month of may, that is going to wear out. the warm winter is well over and we are into a normal spring. i think those numbers were not good at all. if you look at the wages, they are not keeping up with inflation. >> let me pair that with what is going on with the oil markets. is that a red flag? is that a sound of alarm given your views of the u.s. economy or just returning back to normal, taking some premium out of the market at this point? >> i think it's less about the iran premium immediately and more about all the talk of raising margins. i think traders saw that as perhaps the first shot in an election year plan to pick on the speculators. if that is part of the first step in an extended plan, people
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want to pair back their holdings in oil. that's what you're seeing for now. we'll have to give it a couple of days. >> i know you're a student of history. this year is playing out, you liked last year. >> absolutely. i liked the year before. >> we have facebook this year, a rise in the market. resurfacing concerns about the euro crisis. does it end the same way? >> well, you can only hope not. so far it's given much of the aspect. i think the white house is concerned that a big heavyweight in the election might be across the pond rather than here. >> art, we have to leave it there. >> let's pick up the conversation with oil. we have slipped below $97 a barrel. another day of losses. sharon epperson at the nymex with the latest on crude. >> oil prices are at the lows of the year. we are trading at levels we haven't seen since the end of december 2011. a lot of the weakness has to do
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with the uncertainty in europe. perhaps not in crisis mode at the moment. a great deal of uncertainty. fundamentals as morgan stanley points out. if opec production continues the pace, we will see above normal levels of supply through the third quarter. you add to that what art mentioned, many traders still talking about the margin increases that will go into effect in august. already long funds may be looking at what that will mean. also keep in mind technically we are looking at a sell-off. a set-up for such a sell-off is well known in the psyche of traders. silver down below that $30 level and traders say we could see silver working toward $26 or lower. back to you. >> thank you very much. it is day one of the facebook road show. has the stock performances of
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recent tech ipo's shown, once the excitement fades, the stock can fade, as well. the question remains, is facebook overhyped? how can you ask that question? of course it is. >> we have yet to start our hype. daniel ernst, i think i can make cases on both sides. one incredible growth company valued at a multiple less than amazon or linkedin. other side, growth seems to be slowing. where do you come down? >> right. look at the fundamentals. they have $ 901 million users. you have a network of something like 10 million websites and applications that integrate and feeds data throughout the world into facebook. that provides them another leg of potential growth building
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their own ad network down the line. they have 140% compound annual revenue growth over the last three years. and they are highly profitable. they have 53% operating margins. >> back to that question. which side are you on? give me your answer here. do you say it's overvalued, undervalued or priced where it should be? >> i think it's priced where it should be. for investors, institutions to have an opportunity to buy on the ipo. it's an opportunity. first day trading has always been a risky venture for those taking part on day one. the fundamentals of business are very strong. the stock is not excessively valued. linkedin is 170 times earnings. amazon 80 times earnings. apple only 14 times earnings. depends on what your perspective is. i think we are just in the first in inning of facebook's growth
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opportunity. the most troubling element is back in february they hosted an event for advertisers called fmc which was the first time they went out in a comprehensive manner to present what they have in the offer. why was this the first year? they've been around eight years, growing fast. we are in the first stage of growth. they are comprehending that. we'll see a lot of innovation. we might see retrenchment as the company has to staff up. >> on the question with relationship to advertisers, do you think zuckerburg and his team, i'm referring to a lot of articles out this morning, have sufficient respect for the advertising industry, that they will be able to keep those big clients, move forward together in a way that keeps both sides on board? certainly in the "financial times" there is one senior advertising executive who said these 23-year-olds are pushing him around telling him he is a
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dinosaur. that is not good for a long-term relationship, is it? >> the majority of growth in facebook advertising up until ree recently has been small to medium advertisers. we are just starting to see large advertisers. there are questions how facebook provides analytics about this. martin soro said we are going to double our ad budget on facebook this year. >> you say in your initiation report the valuation is rich but feasible. retail investors, for the first time some will have access to this ipo. this is a very important question. you say it's rich, but feasible. it sounds like you believe facebook has to grow into its valuation. therefore, right now possibly overvalued. where do you stand on this? >> i think it's fairly valued
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within the range they are talking about. i wouldn't be surprised if they up the range a little bit or certainly would price it at the top end of the range. i think price is a question. the reality is they have so much room for growth in front of them. are you a short-term investor or long-term investor? i think guys positioned long term this will end up being an opportunity. absolutely. coming out of the gate. we'll expect this thing to be very hot. it will pop and that will be a risky time to get involved. for those investors that have a chance to get into the ipo, that is a different story. >> dan ernst, thanks for joining us. >> this is not like a normal ipo because it's already traded. we know it trades at $42. you price it to bounce up to -- >> not necessarily. that was a very illiquid market. not people with full information. >> and you get the pop at the
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beginning. if you get in as retail investor, it's priced to pop, isn't it? ths look an objective statement of fact. >> it's a lot of shares, but it probably wichlt we'll. we'll see. that's why it's so exciting. >> that's why we have to talk about it. we have no idea. >> let's send it over to brian sullivan. we can't wait to hear what you have to say. >> i know. i.t. outsourcing is the same amount of fun as social media. we've got to talk about cognizant technology solutions. ctsh. the problem is guidance. they cut forward estimates saying they are getting weak demand from pharmaceuticals and banking customers. the ceo was on an hour ago. trying to talk up a good game with how they are going grow faster. market hates it. stock is down 18% ctsh. >> thanks so much, brian sullivan.
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one of the nation's largest pension funds, california state teachers' retirement systems accused walmart's leadership of breaching its duty in connection with the bribery scandal. we'll sit down with jack ehnes in just a moment. ♪
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♪ here we are, me and you ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life.
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in charge of making memories and keeping promises. ask your financial professional how lincoln financial can help you take charge of your future. ♪ ♪ oh, oh, all the way ♪ oh, oh
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♪ welcome to the hotel california ♪ ♪ such a lovely place jobs report reigniting fears that the recovery may show the recovery not what it is. digging down to the grassroots of one business, the value end of the market, ceo of choice hotels joins us now. he's got 6,000 small to medium size businesses, franchising his 11 brands within choice. good morning, sir. thank you for joining us on the
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program. >> good morning. >> what are your franchisees telling you, are americans going to travel this summer? >> yeah, and we're seeing them in greater numbers. >> clearly what they are looking for is while they are traveling, they are looking for real value in their hotel stay. we are giving away a free breakfast, free wifi, and free parking. that is about $50 that allows them to spend it on another meal or park. we are very encouraged. we are seeing strong results and
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they are holding up through the first quarter. the summertime is when we make our money. and that is shaping up really strong according to everything we are seeing. >> what about gas prices? i know they are coming down but clearly they are still very high. are the free offers, are they now here to stay do you think for your industry? >> i think that's what customers expect. when they don't get it, it is a big irritation to them. on if road, if you are talking about another 30 to $40, that's not the determining factor. what we are hearing from them is they think it's too slow and
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it's coming back slow and not as quickly as everyone would hope. they feel good about where they are. as a result, they are taking their vacations. they are going to visit their relatives. >> i just want to ask you one last question. like so many people across america can't get a mortgage, that would apply to you. transactions are beginning to occur. new construction is still tough. we are expecting a very strong year growth wise.
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>> the magazine's assistant managing editor next.
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>> profiling the largest u.s. corporations from 2011. legal ger is the assistant managing editor. so exxon mobile and a notable decent in walmart. >> the big story is profit. that is clearing the record last set in 2006. you know, they are cutting costs. going where the growth is in developing market. in terms of the players on the list, walmart and exxon tend to be a horse race. this year it is exxon .
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>> this list has been the largest companies by revenue. so it is a ranking of scale. it is any company that reports to a government agency so it's public companies and the life insurers who report on a statutory basis. it is a list that puts everything in perspective. it's a way to see how companies stack up in context. >> profits were up and margins
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were also up sharply. many question whether it is sustainable as is return on equity. >> that's true. and the sustainability question is key. okay, these companies have done this this. >> basically the work force has remained the same. >> which is the story of the century. >> increases are so much of them, right? >> it's really interesting. but that is their biggest cost center. if and when that comes back. these companies employ one in eight u.s. workers. it's 25 million people worldwide.
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17 million people in the u.s. they are a big employer, not to take that away from them. >> 55,000 per employee in terms of sales. again, showing that. to this idea that it's not worry s
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s. >> welcome to hour three. >> it's not going to go away. it's a huge market. people have lots of skills. you have got factories and wonderful companies over there. so, it is not like it's the end of the world. >> we have got a big bet on the american economy. we will do better when there is a million housing units. i don't have to play it directly. people beat themselves in the stock market. the companies don't beat them, the stocks don't beat them. they beat themselves. >> this thing is way too valuable. i went with the idea of buying property. this thing is ruining the rest of europe. they can't devalue their own currency.
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houses are down 60%. i thought there would be something i could get there. wow. the ipo could be a juggernaut. facebook is a juggernaut. >> it's good. but the more we talk about it the worse we make it. >> while we are disappointed that we took our outlook down a little bit as a result of this lack of acceleration that we saw coming into the second quarter, we are still very confident in the strength in the fact that we are taking share considerably as we go forward. >> good monday morning. welcome to the third hour. let's get a check on the markets here. we have seen quite a turn around from where we were. the dow right now is down by just 41.5 points.
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the avengers smashing records for north america. more than $200 million in sales for the opening record. far above the previous record by the final harry potter film. the world's largest. >> okay, buckle up. buffet top of mind after his big spending spree on friday, pumping over 16 million dollars. so should you follow the oracle of omaha's lead.
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within the company's mexico operations. we will sit down with the ceo in a first on cnbc interview. >> business first live interview after speaking to shareholders. all the details. hello. >> thanks again. >> we are talking about the big ad lips and we talked about some of the corporate scandals that have made their way into the pages lately. one of them is yahoo!. if he was a director, what would he think should be done.
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buffet admitted that he doesn't have any inside knowledge, but based on what he has heard in the news, here is what he says he would do in that situation. >> if i thought that as a director, if i thought that we actually had that one time. if you can't trust the people you are working with, you have got a problem. >> of course in this situation, a concern is that the ceo allowed it to go as being reported that he had a degree in computer science when he didn't. his degree was in accounting. we are waiting to see what yahoo!'s board will do with that. we have also been talking a lotd about walmart. 6 a scandal involving alleged
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bribery with operations down in mexico. it happens to with the seventh largest holding. the company is in a great position, but when faced with this situation, here is how he weighed in on that scandal. >> if the story is reported in the "new york times" a few weeks ago and i don't remember every word of it, it got to the higher levels of management and got brushed aside and did not get reported. >> now that is not to say that buffet is changing his mind on this stock. he says that even if there are mistakes that would go all the way to the top of the company, he is not weighing in on exactly what he thinks could happen here. you could see a situation where someone is forced out.
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>> back to you. >> we do have some breaking news. a source just moments ago roughly 600 people will be in attendance today. the big question, of course, is if mark has nearly 60% of the voting power in what will be a blew chip company worth around $100 billion, would he not care enough to come and do the pitch himself. the word is that yes, he will. of course he took a pass on the analyst meeting in menlow park in april.
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he is going to be here in person to pitch that deal. there is a group lunch. if he does tour the entire road. in or around his birthday week. we know sit pricing next thursday evening and set to trade next friday morning, that is as close as you can get to the actual date. some investors even commenting that zukerberg's appearance alone have been worth the price of admission. 28 to $35 per share. it might seem expensive to some and cheap to others but
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regardless, there will be a lot of excited investors. >> no doubt it is priced to part. >> i think that we all know that perception is sometimes just as important as reality. if there is perceived an issue, it might as well be the best case scenario and go ahead and do that from the get go. his views on the company. facebook acquired one that was disclosed yesterday. that is a mobile application. just the latest in facebook's
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acquisitions. we know that he brokered that transaction. a billion dollar he understands what it means to be the founder and ceo of a public company. giving them a huge break when it comes to fees or paying 1.1% compared to the average in the industry. when the company has not -- does not have a track record of using banks as advisors in any of these deals that they have done. >> melissa, there is no word on what the discount price who buy in quite yet, some of that will start firming up next week.
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i think that pretty much facebook can name its price in this scenario. there is no question about demand for this. >> to be clear, you raised the point. there are no checks. >> you want him to be showing up at the road show meetings. that is a clear point. even warren buffet said when you have a guy like mark at the top of your company, you want him running it. this was his brain child this was his creation.
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>> it's the same as every road show. more on facebook later. >> in terms of calling moves in the equity markets. fwen, 2009, right after the bottom up 100% says take a look at last year when we were out
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here in may. and it was the stevy comment when he said he was getting market net neutral. if you look at last year from may right through october, it was a very, very good time as many of the professionals here said, now is the time to sort of take chips off the table, using a bad vegas analogy in terms of the equity markets. in terms of what is going on we will get a lot of answers to a lot of great questions. in terms of how they see the rest of the year playing out. >> by the looks of you, you haven't been enjoying the
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delights of vegas late into the night. you are looking perky. >> what time was i up this morning? >> you were e-mailing me -- this was at 10:16 last night. >> 4:00 a.m. local time. no fun yet. >> am i on top of a building here? >> you are floating in midair. >> yeah yeah yeah. later on, i do have thoughts about the buffet interview. all the facebook initiations. i will explain to people what this is really all about. >> we need to take a break. just to let you know we will also talk about a ground that took on facebook's board and is now suing walmart over the bribery scandal in mexico. not afraid to take on the big guys. the ceo will join us after the break to talk about the suit against walmart. stay with us. are you still sleeping? just wanted to check and make sure that we were on schedule.
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the first technology of its kind... mom and dad, i have great news. is now providing answers families need. siemens. answers. we have product x and we have product y. we are going to start with product x. the only thing i'll let you know is that it is an, affordable product. oh, i like that. let's move on to product y, which is a far more expensive product. whoaaa. i don't care for that at all. yuck. you picked x and it was geico car insurance and y was the competitor. is that something you would pay for year after year? i, i like soda a lot but for a change of pace...
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>> jack, sit a pleasure to have you with us. what is the general gist of your case, here.
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>> when you file this type of legal action, you are saying we are stepping in on behalf of the company. we are trying to protect the company and to seek change from this type of lawsuit. it's very different from a traditional securities litigations case. >> a sense of discovery process. is that what you have embarked upon with this? you say the derivative action. >> say it again? >> we would normally not be litigating our concerns with most companies. we strongly believe in corporate governance. but this is such an unusual case as documented by the "new york times" story that this brings forth issues that says you can't engage with the directors or can't engage with the executives
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because they are the very individuals that were involved in the bribery and cover up. >> what are some of the scenarios that we should think about in terms of how this thing ends? i will say that would it ever come to a point where he would reduce your holdings of walmart? >> the outcome is not about the holdings. but the outcome is seeking better government for the company. a derivative action is saying we are working on behalf of the company to find out what went wrong and how can this company achieve adequate and reputable government. the primary goal is chapging corporate government and bringing it into processes and potentially if there are damages assessed by the sec, if these
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claims prove valid, then you would seek compensation from the directors to pay those damages. there could be financial reapproximate percussions as well. >> at what point would you ask for the head of the ceo. how would you attempt to execute that? >> the underlying charge in the claim is a breach of responsibility. so what could be more serious than that type of claim to be made of a director or an executive of a company. again, the lawsuit, that's the purpose of the process and the court process is to add that detail and validate those claims. we need to see where those outcomes come from in the case. at that point we will see what the best thing can be done. it certainly would be premature
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to judge that with that type of claim. >> it's not huge taking over say a year's track. i wonder the degree to which there is a political element in what you are seeking to do here in the same way as you petitioned facebook for example, over the lack of diversity that it had on its board. is it about creating a society that is closer to perhaps where the owners would like it to be than just acting in normal interest? >> you know, good challenging question.
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>> so, regardless of the short term fluctuations in the stock price, i don't think there is any serious investor. it's not about politics. there is no serious investor that would not be concerned about bribery, corruption and internal controls. >> i ask the question simply because warren buffet was on the network earlier today and he is a big investor in walmart and he said that fundamentally that his view of the stock had not changed. >> i understood. we are long term investors. we have over $300 million invested in walmart. we are not taking that money out of the company. but we are pursuing changes.
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we think for any company, obviously they have to. operator: with the most responsible form of government and integrity. that's important to any investor. absolutely.
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>> as you just talked about that in just in the prior minutes, that still suffers from flaws in corporate government and practices that need to be addressed. >> would you expand your investment beyond what you already hold in facebook? >> we would absolutely be part of the public market investment going forward. >> thank you very much. >> we have got the latest from all the biggest players in the game, next. ♪
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for a limited time get up to $200 off select computers. staples. that was easy. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach. he was there for us, even if we needed him in college. you could call him, you had his phone number. he was just focused on making sure we were gonna be successful. he would never give up on any of us.
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>> the internet will change television and media companies forever. so what are the big players doing? what are their bets. here is a special presentation tonight. julia, over to you. >> tonight, stay tuned. the future of television premiers on cnbc.
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everyone wants a piece of the future of television. tech titans all wanted to stream tv to your living room, smart phone and tablet. and then there are traditional distribtors. i talked to jeff, the ceo of time warner. they want to make sure that consumers keep paying for their services. what they are doing is teaming up to make subscriptions more valuable by offering access to content any time, anywhere and on any device. what is really happening is the line between traditional and new media, the line on the internet that line is disappearing. the biggest media giant is creating content just for ewe tup.
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>> another key thing is that in these days. >> so, stay tuned tonight. tune in at 9:00 p.m. to watch the future of television. we have got great great stuff in there. back over to you. >> thank you so much. all right. we are just moments away from the close in the uk and across continental europe. we have got to go to what we are expect.
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>> as we got closer and closer to the start of the session and it became apparent. the u.s. was essentially going to hold its own? given where we thought we might go in anticipation. obviously you have a essentialist that is in charge. he is now going to meet with mercole. obviously a lot of excitement. what i think we might be see something that we are okay with a more progrowth agenda. brings the debt down. of course there were two sides to it. >> you have made the point that the french market had been declining in advance of this election. perhaps this was somewhat baked in.
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here you go. this is the dow jones industrial average. let's get that up. >> the european markets are closing now. >> so you see there is a lot of green. ignore the uk shouldn't be there. it should be gray. it did not trade today. the point that melissa so importantly drew to our attention. let's have a look at this chart here of the dow jones industrial average again the paris market. of what might happen. so you have seen the great shapes overall today in paris, it has come down from the high and already has been people have paid the price of that. of course, the greek collections, that was the bigger
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wild card. didn't get more than 32% of the vote. 149 of the 300 seats in parliament. the indication is maybe we will go now towards another election. that may be why the markets have not fallen out of bed so much today. yes the greek market is in negative territory, yes there has been a spike up on where we are in yields. most of the debt is held by the public sector and there will be a bigger stand off and we will come back to that discussion no doubt time and time again.
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>> in fair seasons kind of where we are coming from. >> back to you. >> bouncing off of three month lows. want to go capital markets editor from las vegas with his thoughts here. gary? >> well, you know, warren buffet was on earlier. let's take a listen to that. >> cash is as risky of an asset that you can own over time. you are not taking risk off.
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so that is the biggest risk i know is cash. >> a lot of viewers hear that. they know the cash is not earning anything and they are worried. if that was truly the case, then why at the corporate level are they holding. you want to make investments. clearly should be returning more of that cash if that is what the belief is in the form of a steadily increasing dividend or buy backs. this is always a debatable issue. those that are fully invested 100% of the time. if you are in and out of equity markets and from time to time held cash you have outperformed a passive 100% investor.
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yes, over 50 periods within that decade, that is just not the faktd. don't be scared away by a comment like that. >> all right. thanks for that. >> i think two things matter and that was a great summary. greece and what's going on with the oil markets. everybody i talked to this morning is passing around timetables for the next six weeks of what is going on. that's the big story here.
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>> remember, there is a view about what is going on. they are going to be upholding the austerity plans that were agreed to. that's a big issue. if you don't that could be a real problem. at the end of june, the greek parliament is going to vote on another round of cuts to cover the shortfalls that they have already gotten and agreed upon. how will you have a vote when the parliament can't agree on what it stands for. that's going to be a major problem and a lot of people will argue about whether this will be the breaking point in the euro or not. remember, there is money coming. destroit is going to give them money by august if nothing happens, if they don't vote on more cuts they will not get the money. there you go. there is your bailout part three. let's move on.
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i want to address that. have you seen what's going on here. this is a real help to the overall economy. it's been a mess for the energy markets. all the big energy producers are down big and it's been traging on the stock market. this is what it looks like now. let's not quibble here. it's been straight down. put up the chart here so you can see all of them are down. >> two dollars for natural gas and oil declining five or six
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percent. it's no surprise. i think you will see that very quickly. >> interesting. >> thank you, bob. thank you very much for that for the moment. let's get more opinion on exactly what has been happening. head of the strategy for the g-10 for bank of america and merrill lynch. nice to see you there in london. >> having voted against austerity. do you think now when push comes to shove. >> clearly the elections send conflicting messages. from the one hand, the greek
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people want to stay in the euro zone. but from the other hand, to support austerity program. more funding. and with just a substantial debt haircut. >> what happens here. how does that conflict play out? what's your judgment. >>. >> quite often pop ewe list parties have done very, very well. the two parties in support of the program cannot form a government on their own but no party is willing to join them.
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nothing would go for another election. to form a government are exactly the same. back at square one. >> okay. so back at square one and we had the elections in france which were widely expected. the defeat was the worst one in 50 years. what is the bottom line for the euro? do you expect it to remain range bound against the dollar? >> we believe the risks are on the downside. clearly they are affected by the situation in the u.s. by changes in market expectations. about qe 3 in the united states. but now we see. we can be consent about
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unfolding in the euro zone. spain is under funding pressures again. >> we are out of time. i want to grab hold of what you think happens here. you say the problem is tractable. what gives down the line. keep voting against austerity. is there a stand off between the rest of the european union and greece is asked to leave the union. >> give more funds to greece to allow a more gradual fiscal consolidation or decide that the rest is better off. a lot depends on how they are not easy solutions here.
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approving more funds is politically very, very difficult. >> joining frus bank of america in london. >> let's get the u.s. perspective on all of this. joining us here with more. dan, you heard say that he thinks it's paralysis in greece. basically in the case of france for instance. under normal circumstances, paralysis is, you know, we should welcome such an occurrence. the problem in that type of a viewpoint is when sit not fully
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functioning. if there is one thing you can say they have to go through a further temple imminently and they can't get anything through parliament. so they will automatically be in breach with what is already agreed. >> bob touched on it at the board. they have a very short period of time here. days, maybe a week or two. we're going to hold off until you figure it out. >> it is something you have to
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be aware of. >> actually, the worst of the crisis is behind us. that is what is staring us in the face. is he right? >> i haven't read his note. >> it's not the worst. the s&p is down modestly. fully discounting. i think if the credit crisis has proved anything is that markets are efficient is nonsense.
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it's something to be aware of. ill may be true. as i joke in meetings with clients. >> it sounds, almost, it sounds like you are saying you know what? all these guys are saying it's up 200, buy at 200. that doesn't hold water. >> listen, any number of academic journals say you can't time the markets. my point is from a strategy
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standpoint. this is not 1995. if you view things solely through the prisment, that might prove to be correct. >> thank you so much. >> the facebook road show officially gets underway in the next few minutes. . they are waiting for his arrival. we are waiting to get an update. that's next.
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>> oil at 97 bucks. oil king on where it goes from here and especially how to trade it. there is always lots to trade at the top of the hour. >> facebook officially kicking off the new york city right now. mark zukerberg expected to arrive at any moment. k kayla? >> you can see the crowd starting to form behind me.
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>> putting off anything they were going to do to wait for mark zuckerberg. inside the sheraton here, there is a line forming out the door and around the block with investors who were told to turn up early for the event. they are not checking ids until 11:45. that's going to take quite a while. as for when mark comes, we are still waiting on word as far as timing. we are told he is in jeans, a hoodie and sneakers. unclear if it will actually get
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underway. we will have more from you as we get word that mark and sharl are arriving. what an event today. >> have you got the back entrances covered there? when they were up on park avenue, they didn't come in past the press. >> they are sneaky. >> sneaker in sneakers and hoodies. >> you know us. of course we do. anyway they come in, we will have it covered unless they decide to land in a helicopter on the roof. stuff like that is out of our control. >> i don't think they can get a contin
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coper t c copter on the roof. >> disknee avenged. stay with us.
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>> wig news over the weekend. avengers making a strong start, taking in over $200 million in north american theaters alone over the weekend. two top analysts join us now to weigh in.
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also joins us. he is a senior mediator and equity analyst with standard and poors. you have got to feel sorry for rich ross. the chairman of the studios. >> i don't want to go there. i think it really illustrates the acquisition which under the stewardship, he has presided over these with pixar and marvel. i think if disney could continue to create and grow why is a franchise important? because they could use the different aspects of the machine away from the studio officer because they have got consumer
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products, theme walter parks, the cable tv businesses. that's why the value of what the avengers was able to do over the weekend helps. >> what is it about this marvel string that keeps delivering? >> to be fair, marvel has not had a perfect track record. >> this is a great movie. it has got a 94% rating. >> i thought thor was a great mov movie, too. i loved it. the 200 million is an unbelievable number. that is a record. it has to do with the quality of the movie. i think it would help. especially when you look at what they have done organically.
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>> avengers fans are out there. it is not to disney as hunger games was to lion's gate. >> do you see one movie on the stock? we would naturally be bucking that trend today clearly because of the outstanding performance of avengers. after that, john carter debacle, so looking ahead, there is all kinds of possibilities here. you get a sense that investors are salivating about a potential upside from avengers, cross key channels and multiplatform and think about the potential
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affiliated characters from avengers as well or even the time marvel library. this film should put to rest any potential questions on the viability of economic book super hero adaptations. i think really the upside for this film is phenomenal, if you will. >> what is an avengers premium. >> in terms of the potential eps. those estimates have come down significantly. you can think about the back hand. the dvd. keep in mind it's two weeks.
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i would bet that when all is said and done, this frame is how much of your price target is avengers. >> i think it's hard because i think investors look at the film business as somewhat hit or miss. so we ascribe a low multiple to hits. we didn't penalize disney for john carter as much.
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>> if i can just jump -- >> thanks for your time. >> anthony and tuna. >> i think it was a great movie. >> you say anthony. >> they can actually create things you can believe in. >> it was the site of the place where mark zuckerberg is going show up. >> i can't imagine that he is going to go past that rag tag. i mean, really? >> we have

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