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tv   Squawk on the Street  CNBC  May 14, 2012 9:00am-12:00pm EDT

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in here, is it going to go up based on what these guys do? or is it based on -- >> or is it based on the sale. >> patents like aol, can they reinvent themselves on a smaller scale and remain profitable. >> that does it for us. "squawk on the street" starts right now. ♪ facebook ceo mark zuckerberg celebrating his 28th birthday today. he'll have a lot to celebrate this week. how fitting on the day he was born, the number one song on the billboard charts was "hello" by lionel richie. hello. i'm melissa lee along with carl quintanilla, jim cramer and david faber on the floor of the
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new york stock exchange. as for europe, got a lot of crosscurrents there as the euro is nearing a four-month low. seeing red arrows across the board. the most notable loss is in france down 2.5%. yahoo!'s ceo scott thompson is out and a victory for dan lobe who wins three board seats. how does the company reset and what's behind thompson's reported disclosure that he has cancer? at jpmorgan, three big firings as a result of that trading loss. elizabeth warren calling for jamie dimon to resign from the new york fed. and we still have a shareholder meeting to get through tomorrow. greece's exit from the euro looks like a real possibility as new elections may be set for june. greece's stock market at a 20-year low today. and carl icahn expected to disclose a big position in chesapea chesapeake. we start wuf with yahoo!.
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scott thompson has resigned after only three months on the job. yahoo!'s global media head has been named interim ceo. lobe will get one of the three seats yahoo! has awarded to his third point hedge fund, the other two going to a structuring expert as well as a media consultant. but it's interesting how quickly this has snowballed. i don't know what your reaction was over the weekend that he is stepping down. >> i have to say initially, when we first got lobe going after him, it was may 3rd, i think i was looking back, i did not expect that we would see a resignation from thompson. i don't think i'm alone in that. but always difficult to say. from what i understand, melissa, perhaps the key was that he tried to get the search firm to support the idea that they screwed up.
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and when they came back and showed evidence that it was not them, then you have a board that doesn't believe its ceo. we've seen this before. hewlett-packard, for example, when trust becomes the issue. but if you had told me it would go down to road initially upon lobe coming after him, i would have said unlikely. don't mess with dan lobe. he gets three of the four seats he was seeking. harry wilson and michael wolf get the other seats. get back to finding out what yahoo! is worth. how much skt is the 40% skatake alibaba worth? fourth ceo in eight months. >> in corporate america, you can get away with saying, oops, that was an oversight. but when you decide to give
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someone else the blame and they've got the goods about why they didn't do it, you're finished. you can't coffver it up. every board member had to feel like, wait a second, this isn't innocent anymore. even though the guy was a good executive. >> and then "the journal" said he disclosed to the board that he has thyroid cancer. it can't even end well. the whole episode has been difficult from start to finish. >> it has. a huge distraction for a company that can't afford to have them. and starting over again. let's put thit way, you're going to have a new ceo. you've got almost an entirely new board of directors when you look back at who was on the board a year ago and what that board looks like now. and then you have these big questions looming. what's it worth? what's the value, if you could -- a tax effective split
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of the alibaba and yahoo! japan stakes? loeb should have taken his 16 bucks when he could have gotten it. we'll see. >> this seems finally like a real reason why yahoo! should rally. we've seen decent moves in the stock up or down. but at this point, it seems like with a fresh board, with a new ceo, with a clean skate, with an activist there, a restructuring expert on the board, a media consultant on the board, maybe this is the time yahoo! will actually unlock value. >> dan loeb as david mentioned is someone you don't want to mess with. what's been lacking is someone who said, we have to sell this company. the avon problem, as long as there are people entrenched in the board who say, we should go it alone, you'll never get results.
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david loeb is a very tough man in business. have you seen anyone tougher than dan loeb? >> not when you get on his bad side. which i try not to do. yahoo! came out with a belligerent press release in which they questioned loeb's qualifications to be a board member. >> oh, man. >> i know for a fact, dan had this in his back pocket and was waiting. he might have used it at some point. but then he wanted to use it right away. >> let me jump in here. jpmorgan finally has out a release. the chief investment officer will retire from the firm. has served for more than 30 years as the head of the chief investment office. matt zames, head of capital markets of the mortgage bank, will succeed her. jamie dimon, says her vast contributions to our company shouldn't be overshadowed by
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these events. any surprise, jim? >> no. she needs more time with her family. but to be candid, people at home read these bonuses. she was paid $11 million. people want that money given back. these are all very wealthy people. they have tens of millions of dollars in municipal bonds. they have a beach house, a country house. and i think the shareholders should be outraged and want a clawback. we want some of that money back. we know the justice department is not going to look at it. probably nothing criminal. why can't some money be given back? >> if we make up a list of whose money we would back, would ina drew and jamie dimon be at the top of the list? >> i don't think there's anything wrong with asking for them to give the money back. these people took huge amounts of money. i'd like to see jamie dimon
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break the tradition and say, i'm giving up what i'm making, i really let us down, i let the shareholders down. and i've convinced ina she should give back some of the money. i have given up my salary when i felt -- in my previous role, i've given up what i was paid that i had a right to because i thought i let people down. it was something that people said, at least he's got a conscience. a guy with a conscience says, i have to give some of this money back. it's not a bad thing. you're real rich, guys. you're real rich. >> you can't do that every time you make a bad trade. >> how about if you tell people it was a good trade -- i think it was the arrogance. >> the arrogance of saying it wasn't a big deal? >> yeah. it's one thing to some on tv and say, i made a big mistake. but i made a big mistake, i was paid a lot of money, i didn't do my job, i'm writing a check back to the treasury in order to give
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the shareholders a break. >> that's going to happen. >> you think? >> no, never. >> that was sarcasm. >> i got fabered. >> how much should be given up? would it be the amount to cover the losses at the end of the day that sk that jpmorgan will bear as a result of this bad bet or is it more? >> 2012, no money is going to be made. please. money hasn't been granted yet. going to play for free in 2012. one of the things that really bugs me about the bankers in the world. the interest that they should be -- unless they're total fools, the interest in their muni bond portfolio is far more than enough to cover the east hampton house, go to turks and caicos. these people are able to handle it. >> percentage likelihood at the
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meeting tomorrow that dimon says, i'm going to take a dollar for this year? >> he watches the show. >> he's not going to be writing a check to the treasury. >> but he's going to say, i'm not going to take any money. build shocked if he didn't give up the money he's supposed to make in 2012. >> in terms of the stock market, jpmorgan shares down over 9%. the rest of the banks got hit. continued concern about these moody's downgraded -- potential downgrades which hang over the industry. perhaps moody's will be emboldened by this and say, there's no transparency in this business. we're going to take it down another notch. where are you on the stocks these days? >> i think international banking is something we've lost control over. i've tried to go through people on the desk at jpmorgan, what the trade was. i used to do this. i'd say, i screwed up on that trade, so i have to hedge that
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trade, hedge the hedge the hedge. this is exactly the kind of dumb thing that jamie dimon was right. now never do this. this is management of money 101. don't complicate a bad trade by making a worse trade and a worse trade. that's why people have to be fired. >> you get so big in the trade. >> do you think derivatives exposure at this point allows for the possibility of losses like these happening again soon, david? >> i don't know, is the answer. to that point, there's so little we do know. i went back last night just as an exercise -- i follow this company relatively closely. the chief investment office, in the last eight months i've started to hear about it, i wasn't aware of it. i went and looked -- >> what is a derivative for $100? david's on jeopardy! tomorrow night. >> no one knew -- don't you think no one knew what this trade was? >> i look back. they were not mentioning the
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chief investment office in their public filings until 2010. maybe it was in there the end of '09. i went quarter to quarter. three mentions, two mentions, one being ina drew's resume and running the chief investment office. then you couldn't clearly would never understand what trades were going on there no matter how much disclosure. takes me back to what i talked about many times, whether citicorp or merrill lynch, you would have never understood the risk they were taking in the mortgage market. >> london, can someone tell me what happens when you go to london? do you lose your mind? the people who were betting on sovereign debt, people betting on bonds, stocks over in europe, they should just give up. they should say, i can't figure this out -- >> aig, financial -- >> none of those people really paid for it. >> that's where all the cdss are -- >> these are people who literally don't understand their own trade.
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the engineering has been too much. the french engineering is even more mindless and crazy. >> you believe that jamie dimon could possibly say that he'll only take a dollar in pay tomorrow. is that a turning point for this stock, down 1.6% today. does it clear the problem away from a stock perspective? >> i think only earnings will do that. recognition that maybe they can still have a really good quarter. i got wells fargo here. wells fargo is not going to be doing these things. one of the great things about wells fargo is it's the united states' stagecoach. i think you need that. i like mortgage business. you make a loan, you make a little money. i keep thinking about the people that work for jpmorgan other than in london, they're saying, i guess everything i did was a big waste of time. >> you have to think the multiples are going to stay low and price to book are going to stay low, for good reason.
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gives you another reason to think, okay, we've got -- these are riskier than we think. >> if jamie dimon can't figure it out "d" $19 billion in 12z 2011. put it in perspective. it's so big they can't get out of it. >> do you think ina -- >> she's retiring. after 30 years of service. is she demi moore in the movie "margin call". >> oh, yeah. >> the one who comes back to help consult. >> right. this is the sequel to that movie, "avengers 2". >> huge. >> i was working on hershey this weekend. you see they take cocoa, wrap it up, they sell it. they make a lot of money. that's a business i want to be
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involved in. >> this is what we're going to come back to. we're not going to decide the stock market is no good. we're going to decide this 17% of the s&p should be 12% of the s&p or maybe 9% of the s&p. >> you're saying it's safer to wrap up chocolate than derivatives? >> they're having a good quarter. all commodity prices are coming down. anyone who's a buyer of the commodities, the numbers are too low. >> let's talk the overall markets, poised to open to the downside, following a week in which the dow fell 217 points. worries about europe contagion on the front burner. concerns about greece's future in the eurozone. spain's bond yield spiking above 6% surrounding the concern of the health of spanish banks. europe back to fore. finally we saw the wrap-up story
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in "the journal" today about companies -- u.s. companies citing european woes. they cited fossil and a host of other companies that have said, there is european contagion we are seeing in the balance sheets. >> when we got to spain last time, start getting a 6% -- some grown-ups step up. are there grown-ups in the room over there? >> i think there are at the ecb. but it's not getting any better. it's going one way. it's not clear to me it's going the right way. >> you sound wistful. >> everybody who's been cautious has a right to be cautious. we have to go back to last summer. psychologically, it's going around in so many investors' minds. >> this morning, jpmorgan says 50% chance greece does exit, takes the ten-year here back to 1.5. thought the 1.8 trade was interesting. >> better make sure the office takes the long bond.
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that could hurt. it's a $370 billion portfolio. but don't worry about it. >> i feel much better now. i want to point out that there are plenty of companies that don't have that exposure. you do have to sift through. i think there's historically between someone step up. but there's almost tremendous embarrassment that greece could do this to the ecb, to the eu. obviously spain, the bank stocks are still in free fall there. >> not as though the market hasn't had time to prepare for this possibility. we've been talking about it for two years. >> it matters. go back to jpmorgan for a second. we can poke fun at jpmorgan. but our banks do have a lot of capital. the $2 billion is a rounding
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issue for our banks. >> the scary part is they're dealing with this sovereign debt crisis with a new team of players who are going to have to create some policy on their first days in office. when we come back this morning, the countdown to the facebook's ipo this week and the red flags that one analyst sees when it comes to their valuation. another look at futures this morning. a lot going on. possible triple-digit decline. teachers get the training... ...and support they need? schools flourish and students blossom. that's why programs like... ...the mickelson exxonmobil teachers academy... ...and astronaut sally ride's science academy are helping our educators improve student success in math and science. let's shoot for the stars. let's invest in our teachers and inspire our students.
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best buy out with a release from the board. the results of their independent investigation into the personal conduct allegations involving their former ceo, brian dunn. the headline is that the ceo they say violated company policy by gaging in what they're calling an extremely close personal relationship with a female employee that negatively impacted the work environment. no misuse of company resources, no misuse of aircraft. but the results are out. basically confirming what some had been whispering about brian dunn's tenure at best buy. >> down 17%. 18% year to date. what a destruction of value there. as we mentioned earlier, facebook ceo mark zuckerberg celebrating his 28th birthday today.
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here's his horoscope in today's "new york post." the planets urge you to spend more time with partners and loved ones, not just on your birthday but throughout the coming year. yes, your career is important, but true happiness can only be built on personal relationships. that brings us to this morning's "squawk on the tweet." play astrologer for a day and write mark zuckerberg's horoscope. tweet us and we'll air your responses throughout the morning. call for creative writing here on "squawk on the street." coming up next, one stock that definitely should be on your radar, cramer has it in mizz mad dash. one last look at the futures. looking for a lower open here. the dow looking to lose about 72 points -- 92 points at this point at the open. stay tuned.
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♪ volume in one direction s that the problem? >> are we going in one direction? futures decidedly negative. a lot of news. we've not covered chesapeake and that expectations carl icahn will make a big disclosure. >> it wouldn't be a surprise if he took a big position. the one thing i would point out is chesapeake got loans over the weekend. that's going to make it so there's a little bit of stabilization. i don't expect a fire sale here. i don't think you're going to get even a sale. pete miller is the lead director.
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he's the ceo of national oil well. he is not a captive to aubrey mcclendon. >> what do you think icahn really wants in return for his support? >> he wanted to be able to offer advice to the ceo directly, take a meeting, let me give you or n orientation about what to do. i think he can be constructive but the problem is the balance sheet. >> but you don't chase icahn at $15? >> no, i'd be a seller rather than a buyer. traders tell me, and i don't agree with this, this is enron. when you use the term enron, that's a frightening term. i do not believe it is enron. but that is the chatter. >> thank you, jim. melissa, over to you. very big open here on wall street to kick off this new trading week. does jpmorgan weigh on the financials? avon as well as homebuilders.
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about to kick off a very busy week. a lot of news today. a facebook ipo and some other important data. at the big board, the brazilian american chamber of commerce. over at the nasdaq, celebrating its tenth anniversary, huron consultanting group. >> let's discuss avon. >> trading higher by 4%. >> what i can tell you is if avon has said they need a week. cody said its deadline for avon deciding was today. what i can tell you, sources familiar with the situation tell me cody hasn't decided what it's
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going to do. will it adhere to its end-of-business-today deadline and say, sorry guys? one would expect you give him a week. we'll know most likely before the end of the day. >> a man worth watching here. it's byron trye. he's a sensational guy. he's warren buffett's banker. i felt it was such an insult for avon not to even acknowledge the fact that when you involve trott, the deal seems to get done. >> the fact that they're willing to consider letting him in is a change. they said, they want a week. one would expect coty would give it to them. they're giving them a fig leaf, if you will. but the result at the end of the day will be the same.
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>> a fig leaf there. jamie dimon talking about open kimono. this is a new discussion about corporate america. they have no clothes to the emperors of our time. >> i don't want to see any of them naked. >> not one iota. some people like tumi. splunk, the ultimate tech company, and tumi luggage, one of the strange things about this year, the two markets, the ipo markets. splunk, wow, i want to own splunk. never heard of them but i want to own it. tumi, i buy their stock and it's like, okay, maybe not as exciting. this is all prelude to facebook. if you own these stocks as a mutual fund, that's so you can call up your broker and say, i held on to tumi, i held on to splunk, i went maximum facebook.
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that's the way the game is played. >> today is zuckerberg's birthday. a lot of coverage over the weekend previewing the ipo later on this weekend. someone just tweeted that he is half the age of the average s&p ceo but his tenure is twice as long as the average s&p ceo. is that ifs nating? >> interesting. >> bizarre. on tweeting, i want to point out that my great, great uncle, vladimir lenin, pointed out if the rich are unhappy, it's their own fault. that's a corollary to the fact that family matters. >> family matters? >> people talk about astrology, the astrology is directing him towards family and happiness. it's not john lennon. it's vladimir lenin. >> i-n, not o-n.
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>> he was only a pass killer who killed millions of his own people. >> no biggy. >> i see people on the street and they're like, you, you, you! i remember what your great uncle did in russia. >> he's in the tomb. >> i'm paying for the sins of no one. >> take a look at the homebuilders today. they're up about 1% across the board. guggenheim upgrading the sector and credit suisse says it likes the likes of port, lennar and toll. >> spanish homes down 70%. building, what, 400,000 homes? building what we used to build when our country was half as big. obviously our birthrate is down. so you don't have the big household formation, down 8% in the last three years. but it is refreshing to remember there are companies that have nothing to do with europe and nothing to do with derivatives.
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and those tend to be places to build. >> it's true. those that have something to do with europe, are not doing very well. goldman sachs down at the $100 mark this morning. >> tangible book. >> tangible book. >> like that matters. >> tangible book is a fairty tale. if it's "avengers," it's making a lot of money. >> let's get to bob pisani. mr. pisani, what's moving this morning? >> oh, brother. people complain our ten-year. we're at 1.78 on ten-year. did you see the german bund? 1.44%. apparently that is an historic low. so the german bund just hit an historic low. we're talking about the yield, not the price here. lows all over the place. four-month lows in copper, four-month lows in the euro. five-month lows in crude, in gold.
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the aussie dollar at a five-month low, the cac is at a five-month low. all throughout the weekend, euro leaders talked about greece openly leaving the euro at this point, even schauble said it over the weekend, this is going to be the vote on it. imagine how frustrating it is being the european leaders. there is no greek government to talk to. they have a review coming up of their fiscal plans under the new austerity agreement that they allowed that's coming up in june. there is no government to talk to to have a review with at this point. it's likely it's going to be put off. but there's going to be new elections. it's not clear what the outcome of the elections could be. there could not stalemate at this point. it's going to reach a boiling point very quickly. the big talk over the weekend was what happened in germany's election.
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this is the biggest state in germany and merkel's christian democrats lost the elections to the social democrats. that's a very important election. the social democrats are very strong in that area. what's going to happen is germany's going to vote on this fiscal pack they created in europe in the next month or so. the social democrats are going to say, you want this to go through, you want an austerity package? we want more growth along with the rest of europe. and they're going to use that to extract con kecessions from mer. the social democrats are going to have a big say in germany. china boosting the reserve requirements. normally that's a real boost to the asian markets. but we didn't get it because this time everybody recognizes there's still money around in the system. they have to have more demand in china. they can't just have the money. without the demand, you have to figure out a way to do that. they're talking about lowering taxes and changing some of the
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codes there. but this is hard. this is long-term issues. that's not easy to solve just by lowering the reserve requirements. back to you. >> thanks, bob. so difficult when you talk about the social democrat, the christian democrat, we're all over our heads in america. very difficult to comment on the interpolitical nature at germany. seema mody is at the nasdaq with the latest. >> concerns over the eurozone continue to weigh on the nasdaq as well. among the stock stories we're following over here today, yahoo! dominating the headlines. the ceo scott thompson stepping down. that news seems to be well-received by the market as the stock is trading higher. also on our radar today, symantec getting slapped with a downgrade by goldman sachs citing shrinking profit margins and worsening cash flow. that's the reason for the downgrade. aside from that, a big week for the nasdaq. history in the making with facebook's ipo.
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some analysts say we may see a shift of capital from money managers, allocating capital out of the zyngas and groupons and into facebook. time, of course l only tell. speaking of groupon, they report tonight. jim, back to you. >> amazon push this weekend was right to my neighborhood as opposed to the push of things i don't really want in brazil and brooklyn. let's check out the latest moves in energy and metals and go to bertha coombs. metals, energy, still in free fall. copper in free fall. >> definitely. not just the eurozone concern. that's front and center. but as bob mentioned, china lowered its reserve requirements. but it's because its industrial output was lower than expected. the estimate had been for an increase of over 12%. it came in just over 9%. china's struggling with demand as he mentions. that's the bigger headline and certainly energy. also you've got a number of funds that are starting to cut their bets when it comes to commodities overall. the cftc reporting a 20% decline
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across a broad basket of commodities, certainly true in oil. definitely true when it came to the metals. gold down 20% in terms of their exposure for funds and silver down 32%. certainly a lot of these funds starting to exit. fortress group, the latest to shutter one of its commodities funds. it's not the sure bet it once was. >> it is not. thanks very much, bertha coombs. take a look at this. this company has often been the subject of takeover rumors but never an actual offer. private equity might be interested, perhaps a strategic. but we don't know. we may soon find out. why? because this morning, we hear that bmc's been notified by elliott management that it's acquired a benefit ownership stake of more than 5%. filed a 13d, nominate add slate of five nominees to stand for
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election at the company's 2012 annual meeting and has said its slate, if in fact it gets elected, would propose the board form a special committee to pursue a sale of the company. >> who the heck would buy this darn thing? >> there's plenty. dell is a name that comes up. it's thought to have been attractive -- and it would be somewhat large but not something that private equity could not do, given the financing market. we'll keep an eye on it. there was speculation when the stock was in the 50s some time back, they did try to pursue a potential sale, looking for 70, they didn't get hit on it. there have been a number of activists around this name. but elliott one of the more active activists is getting aggressive. they put a poison pill in, as you might expect at 10%. >> i don't know. i look at bmc, it's been around forever. it's not really the right time to try to get something to happen. the fundamentals do matter in
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the end in these takeovers, they're possible takeovers. >> they've been successful in a number of their efforts. we've already touched on avon. we'll see what happens there in terms of what coty actually has to say. that stock also up this morning. and then we have chesapeake chsh which you guys talked about earlier. chesapeake reversing the loss on friday when people got very concerned about the delay in the filing. >> right. >> of their 10k. >> you've had carl icahn many times. >> yes. >> seems to want to stick when he gets involved. worth following what he does, worth buying what he does? >> i think it's a mixed track record at this point. david, what do you think? there are a number of high-profile battles where it would be perceived he did not win in the end. clorox being one of the most recent ones.
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what he will accomplish remains to be seen? he acknowledges he will probably not be able to find a bidder for the company as a whole. can you stick with the company where nat gas prices the way they are? >> carl had a great year last year because of his investments. ken squire, my friend at 13d monitor, has done a study of activistings including icahn. it's an interesting question you raise. there is a possibility he's already past 5% and will have to file a 13d. given the volume in that stock, it's not inconceivable. it's traded an enormous amount of shares over the last couple of weeks at chesapeake. i also heard he was in the p
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prepreferreds. >> they're a de-filer as well now. >> they could pair up and become a powerful team. >> and aubrey mcclendon saying they have $60 billion in assets. no one's ever doubted the quality of their assets. they doubted the balance sheet. but the quality assets is very high. in the end, that will matter to china or korea where i think they'd shop the company if they ever got the go-ahead to shop by the lead director, pete miller. i'm not sure how much control mcclendon had right now. >> 1,338, a mid-morning attempt by the shorts to really turn up the gas. what do you think happens in the next few hours? >> i think this is more difficult today. the pattern that we can bounce when europe closes may not as certain today. we're not that oversold. there is a lot of negativity.
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my take is that by 1,112, people start sorting out the general mills, hersheys, people benefiting from the commodity climb and continue to sell the financials because they're hard to understand. >> the weakness in the financials, seeing morgan stanley, for instance, down by almost 4%, contributing to this more than 1% loss for the s&p as well is the dow jones industrial average. a lot of people are saying 1,330 is a key level on the nasdaq. that's the best of the three major indices, down by .8%. apple is holding steady, helping to steady the ship over on the nasdaq. we'll continue to monitor this selloff as it shapes up. coming up today, it's mark zuckerberg's 28th birthday. we asked you to tweet us his horoscope. as we take a break, there are some early movers here on wall street and some bright spots.
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take a look at those. i went to a small high school. the teacher that comes to mind for me is my high school math teacher, dr. gilmore. i mean he could teach.
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the dow heat map, a sea of red. cicso systems is higher by about .3%. they got beaten last week on its earnings report. but it is higher today. crude right now at the lowest levels since december 19th. seeing energy stocks across the board take a hit. the interesting fallout from the chesapeake news in terms of its ability to fund its businesses is that pickering says it's the biggest consumer of oil services. that sector is down sharply today. >> people who are owning their midstream, mass limited partnerships, those are going to go still lower, i believe.
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baker hughes, not so great in that last quarter. halliburton, not so great. >> crude, talking the lowest levels of the year so far. gasoline's come down but not nearly as much. >> not yet. there is a lag and there's a lot of refining capacity questions. let's take a pepsi, okay. pepsi is a stock that's held in here well. they are a huge beneficiary of all the raw costs, whether it's grains or aluminum coming down. but these companies send a lot of stuff to supermarkets. gasoline is a gigantic component. and i do believe that numbers will go higher on a pepsi, not lower. same thing with the restaurant stocks. there will be a bifurcation that surfaces. no not yet. but there will be. >> steve liesman will join us later on this. we should mention alli capital.
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taki taking. >> they'll be in our faces in a nanosecond for mispronouncinmis >> they've already remaid $5.5 billion to the treasury. but they owe the treasury another $12 billion. it appears they have the support of the bondholders to do that and perhaps pave the way for an ipo. they're selling their international funds and paving the way for an ipo down the road. >> this is not a good sign for tar -- >> it could be more repayment to come. >> t.a.r.p. has been good other than fannie and freddie. >> nationstar mortgage buying
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some of the assets of alli. >> there's a lot of companies -- real estate investment trust, totally obscured by what's happening. these do seem like needles in a haystack. but they do exist. >> it's a really big haystack. >> huge. remined me of a wrestling fan when i was a kid. >> usually i'm with you on the references. i can't go -- >> you can't go there? wrestling in the old days. >> i'll bing it. dow's off 121. a lot more "squawk on the street." back after a break. coming up, we love numbers. and so does cramer. his six stocks in 60 seconds is next. countdown to all the fun. we'll be right back. [ female announcer ] e-trade was founded on the simple belief
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simon hobbs here on a monday
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morning. what's coming up? >> in the next hour of the program, we'll hear why you should buy facebook if it prices at $35 or under. we'll talk about yahoo!. sit going to be a big unlocking of shareholder value or are they crippled in their negotiations? and groupon, there's a lot of negativity priced into the stock and they're going to report a big increase in profitability tonight. back to you. time for "six in 60" with jim. six stocks in 60 seconds. we'll begin with tera data. >> this is one of the strongest fundamental stories out there. >> nokia downgraded to hold. >> nokia and research in motion are going away. >>, deutsche bank. >> i have marc benioff on. this is a controversial story. highly valued. >> vertex. >> morgan stanley saying this drug really works. i hope it works. we know a lot of people who
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suffer from it. >> jpmorgan initiating coverage of splunk. >> this is a company that is web monitoring. this is a facebook-related company. >> and finally acom? >> nbc canceled its program. it was an ad for who's up on "mad" tonight? >> go to it this weekend. >> see you tonight. groupon down sharply over the past few weeks. we'll talk about that after the break.
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let's solve this. all eyes on zuckerberg and crew. his facebook prepares to go public on friday.
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why is one investor not buying into the hype? we'll talk to rich greenfield for more on his cautious tone. and groupon out with first-quarter results tonight. what about these big accounting worries? we have your groupon trade in just a moment. phil fallcone's venture is preparing for bankruptcy. it received a waivers from lenders to keep it from defaulting. the lenders have extended the waiver twice but are not expected to do so before tonight's deadline. pressure on crude oil as wti slides below $95. european benchmark brent crude should trade near 100 bucks a barrel. the escalating political crisis in greece weighing on risk assets this morning. and brian dunn is being described as having an extremely close personal relationship with
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a female employee and the chairman of the board acted inappropriately when he failed to bring the matter to the audit committee. richard schultz announcing he will step down as chairman in june to be succeeded by another. are you outraged at brian dunn's severance here? >> the fact that he'll get -- >> $6.6 million. having, quote, ran the company into the ground. and his severance is tied to a noncompete because obviously other people would want to hire brian dunn at this stage. >> they want to hire brian dunn at this stage, i don't know about that. >> a lot of this stuff is contractually guaranteed -- >> what's irked our producer -- >> i like the way they -- >> it's not just a close relationship but extremely
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close. >> and inappropriate. >> there are some relationships that are appropriate, apparently. >> he got to keep his 15,000 twitter followers when he changed his account. >> would that be irksome as someone who tweets, david? >> no. >> do you have cnbc in your h h hasht hashtag, i don't think i do. >> moving on here. scott thompson stepping down as ceo of yahoo! after four months on the job amid growing controversy over his academic record. yahoo!'s global media head named interim ceo during a massive shake-up that included many board changes in the middle a bitter proxy fight. jordan rohan has a buy rating on yahoo!. we're certainly seeing the stock move sharply higher in today's session.
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given the extent of the change at the top and on the board, should we be more bullish on yahoo!? >> think of yahoo! in two different parts. you have the ongoing operations that what people of as the yahoo! portal or media properties. then you have the value of its stakes in asian assets. those are worth a heck of a lot more today than the portal or media properties. that said, i think the guy they've chosen to become interim ceo is the right guy to maximize both. in addition, the involvement of dan loeb will bring in a watchful eye to make sure that the asian stakes, the value are not squandered in some way. sold too cheaply or that the funds derived from the sale of those someday won't be misused. >> but this has always been a complex situation, not to mention the fact that those companies have four ceos in the space of eight months. but getting back to the basics and your evaluation as to why you have a buy on this stock,
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give me quick numbers in terms of what you think the stakes are worth, whether it's with a tax advantage sale or one that actually is fully taxed and what that fundamental business is worth, which is in some form of decline. >> for sure, for sure. a couple of things. first of all, if they were able to sell all the asian stakes tax-free and not squander any of the proceeds by buying assets they don't or anything like that, my analysis shows the stock could be worth $26, maybe even $27. even taxing it fully at 35%, one could get something at $21, which is where my target is, i assume full taxation. >> 35% higher than we were right now. >> even more interestingly, i think last week when yahoo! came out with its 10q, you could see how strong the growth is at alibaba group, specifically the,
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thea -- it could be a top internet asset globally. it could be up there with google and a handful of other names. >> goldman has a report out this morning. it believes the management changes could severely weaken their ability to execute on that deal, that they look like a weak company and may not be able to extract best price for those assets in asia. >> the funny thing about that, while all of this confusion has been going on at headquarters, the value of the stake has been going up and up and up. waiting strangely benefits yahoo!. investors want immediate gratification. i totally understand that. but in the absence of that, delayed gratification at a much higher price works, too. >> but assuming loeb wants money fast, do we accelerate into some sort of deal? >> loeb wants to make a good return on -- maximum return on
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his investment. doesn't necessarily mean next week. i've spoken with his team a little bit. but people may misunderstand his motives. i think he's looking out for the best interest of all shareholders. >> those talks we're referring to have gone on and off for many years between both alibaba and jack ma. nothing says it's going to get done anytime soon. in the near term, over the next year, what's going to drive the stock higher? >> yahoo! shares look more and more cheap on an earnings basis because the after-tax profits of alibaba group is starting to flow into their line. it doesn't mean they're getting the cash from that asset but they're getting the earnings benefit of that. second, i think ross levinson is
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the right guy -- >> what about him? what is his track record? >> you can try to become a platform company and double down on engineering investment. that doesn't seem to work for yahoo!. or you can become more of a media company -- >> isn't elevensohn who -- >> it was a fantastic property for a few years. i will tell you -- >> they lost half a billion dollars on it. >> they didn't lose half a billion dollars if you count the cash flows they took in. so your math's a little bit off. let's look at the facts, though, for a second. social media was very new. arguably people didn't really understand what the business model was there. and myspace was one of the first properties of others to really make a business of it. when you think about what it has turned into, yes, there were
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some missteps at myspace, too much advertising, too slick. but it formed the foundations for other large social media properties soon to hit the public mark. >> levinsohn is a good choice. tim koogle saw it as a media company and terry semil and then carroll. that's been the theme. >> the key differentiating point is i think margins will be higher and profitable will be higher under levinsohn and his team. there's a lot to talk about the future here. >> from the investors' standpoint, if you take a look at making an investment in the internet space overall, when you say yahoo! is cheap, what metric are you using? one might look at google trading
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at a similar valuation, current and forward -- >> for sure. >> and say, maybe google is a smarter bet in the long run than yahoo! >> what most investors haven't done is played out the growth at alibaba group and try to flow it into yahoo!'s income statements. the metric i'm using is plain old price earnings ratio. yahoo! trades at a low teens p/e. and that will be ten probably if you give it a couple of quarters from additional growth from alibaba group. >> i'm worried by this goldman sachs note which has a price target of $15. they're talking about the difficulty in turning the company arn and tound and the t pool being limited. why would you work for yahoo! if you could pick up a job at facebook or google, for example? >> first of all, those companies don't necessarily have that many open job postings. but when you look at it, things can happen, such as a company can go -- be owned by private equity and be turned around.
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properties can be slimmed down and focused and turned around over a period of three to five years. that can make it a better place to work. that's what i would anticipate would happen. by the way, in the process of selling to private equity -- which is something i could see happening after the asian stakes value is realized, i think shareholders would see an incredible return. >> jordan, thanks for coming by. we appreciate it. reports out late last week that facebook may price at the higher end of its range. one analyst waving a flag of caution saying if the social media giant prices above $35, he would not participate whatsoever. but if it's below $35, comes and goes. stay with us on cnbc.
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welcome back to "squawk on the street." i'm brian sullivan. watch shares of francesca's holdings. the chief financial officer was terminated over the weekend with cause for what the company says is improperly communicating company information via social media. we don't know what that is. i'm doing digging on what he did. stocks up on the forecast increased. but i think probably the first high-level c-suite exec i can
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remember that's been canned for social media activity. be interesting to find out what that exactly was. simon, back to you. >> brian, he was tweeting non-public material -- nonpublic information. why you would do that, i don't know? >> what was he saying? we're going to beat the street next quarter? >> i don't know. but my understanding is it was tweeting of material not public information. >> why would he do that? >> that is a very good question. >> can you expunge your past tweets? >> you can. i guess you can -- >> let's talk about the market. thanks, brian. down 146 on the dow. it's a rough open. now 45 minutes into trade. bob pisani is here with more on exactly what is going on. >> i think the important thing is we've at least stabilized. but it's one of those days when you're at multi-month lows on virtually everything.
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you have the flight-to-safety trade and the flight-from-safety trade. the bund's historic lows here, 1.4. and people complain about our yield at 1.7. there is your flight to safety. u.s. dollar on the upside. here's your flight from safety, the australian dollar and the euro, both at multi-month lows. four-month low for the australian dollar as well, at least for maybe five-month lows. elsewhere, commodities, more multi-month lows here. five-month low on most of the big commodities here. copper sitting at a four-month low. crude at a five-month low. gold at a five-month low. you see the commodities to the downside. we're at a lows for the year on a lot of important sectors here. take for example energy and material, sitting at the lows for the year. the energy sector and the s&p
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500 which got hit so badly by natural gas here, keep moving, guys. five-month lows, the lows for the year. materials, industrials, tech, financials. not a lot of places to hide. consumer stocks, most of them are on either side of flat or up. avon, of course, but avon has speculative activity. that doesn't really count. kimberly-clark and hershey down fractionally. not a lot of places. better than five-to-1 advancing to declining stocks. the good news is we've found a bottom, at least for the moment. last week at 10:15, you normally start stabilizing. last week, it kept dropping on several days. as we went into 10:30, we still hit our lows for the day. here at least we've stabilized. >> given where we traded last week, you would be forgiven for thinking this is a major
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rerating or substantial profit-taking -- >> we're still only down 4.5% on the s&p 500. we're not even at the moderate correction stage. even past 5%, still not there yet. we don't have decoupling -- >> but for the year, there's a 10% outperform of america against the eurozone. >> that's right. >> those spreads, that german bund to the spanish yield -- that's at an all-time high. >> greece is in its own -- nobody can really help it. the conversation is, are the firewalls big enough to prevent the contagion? that's about spain and italy and the ecb and what merkel does when she meets hollande, the french leader, tomorrow. >> and you saw what fitch was saying about the potential downgrades of sovereign debt that could occur in the other countries -- this is the
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knock-on effect that is everybody is concerned about. >> bob, thanks. we'll check in with you as we continue to watch this market. let's talk about facebook. as we gear up for the facebook initial public offering frenzy later this week, one analyst offering -- not extremely frenzied. >> or inappropriately frenzy. >> rich greenfield joins us. sorry to involve you in those references. let's get back to this facebook ipo. why wouldn't you advise client, if you get it, buy it at any price? >> we're certainly very early in facebook's push into advertising. what's amazing is if any of you sitting there pull up your facebook page, what's amazing is they generate $4 billion off advertising that right now still seems very early stage. the ads on the right side of the page, usually you see five, six, seven of them running down in a block. it's not terribly gaging. this is not the best advertising
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yet they're already generating $4 billion, we estimate, this year from that advertising. getting to to our motto -- the challenge is whether this is a linear progression. right now, you're dealing with the transition to mobile. look at your mobile phone. pull out your iphone, look at that screen. how exactly does that block of five, six, seven ads translate onto a mobile device like an iphone or an android phone. and then, too, really to leverage facebook advertising to engage the consumer in a way that yahoo! or aol home page cannot, to get a like from a consumer takes a much more creative and ambitious campaign. it involves advertisers learning how to use social media. it's more of a question of timing, i think, than it is about whether this is going to be a much larger company than
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it's ipo'ing at. >> obviously in other parts of the world outside the united states in emerging markets, particularly in asia, mobile is probably the fastest-growing area. and that's how people access facebook and yet they're not able to monetize. are we pricing in the expectation that facebook will be the dominant player in social media in asia and are we better off just buying a basket of asian social media stocks that already exist there? >>. >> you already have a much lower monetization in asia. we're not assuming they ever get access to china. maybe it happens. i think mark zuckerberg in answer to investors' questions has been pretty thorough and clear that china's not an opportunity anytime in the future. china's never proved to be a huge market for value. i think looking at that in terms of asia, leave china aside. but when you look at the way we're modeling out facebook over the next few years, we're
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assuming that overall monetization remains much lower in both asia and what they call the rest-of-world categories, a lot of developing markets. the presumption being that mobile is dominant in those markets. and you'll never see the same type of monetization you get off the pc platform. the big question is what happens in the u.s. and how quickly that transition to mobile occurs and how they actually are able to hold on to the very high monetization levels they currently get in the u.s. as that transition occurs. >> what happens if we put all reasonable thought to one side and talk about the frenzy and the fact that lnkinkedin more tn doubled on its first day. i think you're saying buy it if it's $35 or under. presumably, do you get out before the lock-ups expire six months down the line? how do you trade it rather than investing on the dynamics that you've described?
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>> first of all, i think one very important data point just to correct you, the lock-up in this case, a good chunk of the shares, 6%-plus of the shares come out of lock-up, 90 days post-ipo. but in terms of the trading dynamics, there's going to be a supply and dem. there's already a lot of chatter about there being a significant retail component to this offering. no doubt people have wanted to get into facebook for a long time. i don't advise retail clients, looking at retail investors who are going to make a 12-month bet, if you can get facebook priced on the ipo, 20 times next year's enterprise value to ebit ebitda. once you start getting $35 and above, if that's where this thing ends up pricing, it starts to get much more challenging. there could be a frenzy and you could potentially get lucky on first day flipping it. but beyond the frenzy of day
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one, as a true investor looking out over a 12-month time horizon with the mobile issues that we were just talking about before and with the advertisers learning, i really think if the banks price this in the midpoint of the range, the big investors will have a much better opportunity of making money over the next year. >> rich, appreciate your insights as always. >> thank you. groupon's out with its first-quarter results tonight after the el. the stock is up by about 10%. so far today, they face accounting woes in recent board shake-ups. should you steer clear of the shares? we'll break that down next. [ male announcer ] the inspiring story
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♪ so how do you make money in a market that's down 155 on the dow? you get your groupon.
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trading substantially higher today in advance of earnings tonight. joining us now, daniel ernst, principal with hudson square research. good morning. >> good morning. >> tonight they are going to announce a big gain in profits, are they not? >> that's right. it's very difficult company to predict and after their very large and unsettling restatement from fourth-quarter earnings, the market's not giving a lot of confidence to the story and that's why we see the stock where it is. if you take a step back, we still believe that groupon is global local advertising at scale. some 30 million merchants around the world use the groupon service to reach their more than 180 million subscribers. and it's a different form of advertising. a lot of people think of them as a coupon. but as a local merchant you can put an ad for a big sale in a newspaper and maybe people walk in the door. but with groupon, you pay when customers come inside the door.
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i think that value proposition is there. i think this quarter is going to be difficult. they already preannounced the quarter was in line with their guidance. there's not a lot of room for upside. i think they probably guide very conservatively, looking out into 2q and beyond. i think after that restatement, they're taking another look at how they approach entering new sentiments as they enter travel and products in the fourth quarter, that changed the way they accrue for reserves because of the restatement. i think going forward, we'll see them -- take a more cautious approach to growth. >> help me understand the revenue mix in terms of geography. 63% of its revenue comes from outside the united states. is this going to be another company where we hear about europe impacting business? >> it's interesting because groupon grew up on the back of a recession. so we almost want to put it on the flip side. what happens in a recovery? maybe consumers aren't as price
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conscious and we don't see the activity. so maybe the recession ends up being a positive thing for groupon in europe. the other interesting thing, going back to the commentary around facebook and their effective intraquarter warning during the road show on mobile, mobile is actually a really big driver for groupon. you can get -- right now, you can get 600 deals right now. i can press one button and buy it through groupon. i think where mobile is tripping up google, zynga, facebook, mobile's helping groupon. >> but having said that, you've not excited me about the stock. you just said to me, it's going to go nowhere. >> no doubt. it is a very difficult name to pound the table on. i think especially near term going into the numbers. >> where can i make money at the
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moment? >> well, i think a lot of institutional investors, if they had to buy one name in social marketing, i think they're going to go for facebook and not go for groupon. but facebook at the marked for identification point is trading at something like 47 times my numbers for next year and actually this morning lowered my facebook numbers following their preannouncement last week. and groupon, a lot of risk involved. it's certainly not what i would think -- facebook is the ibm of social media. groupon definitely doesn't have that status. however, they're trading at 14 times next year's earnings. they have $1 billion in cash. they went from losing money to making money. i think it's a long-term play. i think there's still value in group zbln got it. daniel, thank you very much for your time there. the fallout from jpmorgan, that keeps on rolling.
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three key executives set to leave the company due to their involvement in the costly failed hedging strategy, if you want to call it that. this could happen to the best in breed bank, is a breakdown in risk management next for many more? yeah, you -- you know, everything can cost upwards of...[ whistles ] i did not want to think about that. relax, relax, relax. look at me, look at me. three words, dad -- e-trade financial consultants. so i can just go talk to 'em? just walk right in and talk to 'em. dude, those guys are pros. they'll hook you up with a solid plan. they'll -- wa-- wa-- wait a minute. bobby? bobby! what are you doing, man? i'm speed dating! [ male announcer ] get investing advice for your family at e-trade.
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29 of the 30 dow stocks in the red with intel and general
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electric among the biggest decliners. cicso systems, the only dow gainer. research in motion shares back on the rise after falling to levels not seen since january 2004. and the vix is also rising today. financials weighing heavily on the market. down 135 on the dow. jpmorgan has continued to fall today after those losses on heavy volume that we had on friday. the stock down 2.2%, consumer discretionary is lower, materials lower. you see the breadth of the move today, it is decisively across the board f you like, they're at 7 to 1, advancers to decliners. let's have a look at what's happening over at the nasdaq. it's a big week with facebook at the end. but a lot to get to between now and then. let's send it back for a moment to brian sullivan for a quick market flash. >> two quick things.
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nokia basically a $3 stock, just keeps getting worse. societe generale cutting the stock to a sell from a hold. they said if handset sales continue to drop, it's going to burn through most of nokia's cash. ouch. not good. by the way, sounds like you guys are a little bit ahead of me on the francesca ceo. the tweet he sent out was on march 7th. it was, quote, board meeting, good numbers equals happy board. good lesson for c-suite executives, don't tweet out that you have good numbers or the board's happy or that you bought a new bentley. >> he should be fired for idiocy. >> he was, melissa, he was fired. >> and there's the danger.
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you live your life -- >> if you wrote that and you believed that that would be okay and pass muster, you have to be delusional. one hour into trading. let's head to chicago for more on the market's latest moves. we're joined by scott bower at trading advantage. he is at the cme group. let's start in europe. the bund, 1.4%. spanish yields above 6%. how is that figuring into your view of the market right now? >> david, it's not going away anytime soon. go back to earlier in the year, even february when we had the big elections and then april, nothing really is different. we still have the risk of greece leaving the euro. so, to me, that is factored in. but what i will tell you is if nothing gets corrected, if we don't get a resolution over the next month or two, that's going to weigh on our markets pretty heavily. the fact that we don't have any more corporate earnings coming
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out until the next cycle in the next six to eight weeks, europe, no corporate earnings. that's going to be the key here. unfortunately if nothing good comes out of europe, the s&p's probably have a big level to fill, down to 1,260. 1,260 if you look at the last six, nine months since last october, that's the halfway point between the lows in october and the highs that we just set just recently. 1,260 is going to be a key number. the traders on the floor are really looking at that number. if we get anywhere near that, that's going to be a big-time place for investors and traders to reload on this marketplace. >> scott, on commodities, given the worries about global growth, they've been coming down. crude coming down. what's the play there? >> i think the play here is for traders is in and out. there's a lot of scalping opportunities here. we're at 94 right now. if we look at big-time support level, looking down at 88.
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i don't see that anytime really soon. but this is great scalping opportunity, between the 93 and 98 level. that's going to be back and forth, back and forth for the near term. >> scott, we have to leave it there. thanks for joining us. >> thanks, david. let's get to more on the declines in the commodities markets. check in with bertha coombs who's live at the nymex. >> a lot of folks are looking at the technical levels. certainly the environment and the mood is much more negative when it comes to demand with the turmoil in europe. add to that, we've got weaker data coming out of china. china moving to cut reserves for banks is usually a bullish move. however, that industrial output number was well below expectation. so that is bearish. interestingly, while minister al niemi believes that brent will hold in. it's held in above $110. we have a situation where folks are watching wti this morning
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bouncing at $93.65. some traders don't believe we're going to test anytime there soon again until we get bad numbers on the claims later in the week. as far as metals are concerned, copper falling right along with, down just as much as crude today. and gold, one trader in the pits telling me he thinks gold is broken. but he obviously still likes it. he trades at morgan stanley today saying they think the bull run in gold continues. they would step in and buy. but you have to wonder, if you're a fund, would you really buy golds in terms of an inflation hedge? at this point with commodities coming out and a lot of funds getting out of commodities, inflation not a big worry near term. >> it's interesting that they've take tennessee moves by china overnight to be negative rather than potentially positive. thank you, bertha coombs, at the nymex. clearly the markets are weighed down by eurozone concerns and what's happening with banking here.
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how can investors best navigate all this market uncertainty? larry adam is at deutsche bank private wealth management and david katz, chief investment officer at matrix asset advisers, joins us as well. david, let's cut to the eye of the storm. jpmorgan, down again today. would you buy jpmorgan at these levels? >> first, you want to put it in perspective. it's a significant hit, a huge management misstep but it's not going to change their long-term financial outlook or their earnings power. if you have a six-to-12-month time horizon, jpmorgan is going to be a batch higher. they have a secure dividend at this point. we're very comfortable owning jpmorgan here. we would add to it slowly. we think the overall financial group which has taken a little bit of pullback on this, there are a lot of names you can buy that don't have the type of risk that jpmorgan took on, things like schwab, or the regional
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banks like a bb&t or a wells fargo and you don't have this extra level of risk. but we think you can take on that jpmorgan risk. >> at the same time, larry, curious to get your take on whether or not you are still comfortable holding jpmorgan. is there anything that jamie dimon can do tomorrow or in the future to stem the loss in the stock? i understand the fundamentals in the company may not change on a $2 billion or $3 billion loss. but at the same time, there's a psychological component of stock trading and then there's the fundamental part. can he do anything to change the psychology? >> i think when you look at financials in general, i think what's happened here, with all the uncertainty taking place about what's going to happen from a regulation perspective, i think that's more important to the broader market. as far as the individual stocks in the sector, we have it -- we have stocks in general and financials as a neutral to a slight negative. however, agreeing with david, i think you start to look at fundamentals soon. and with the dividends that
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these stocks are paying, with valuations, i think they could become attractive. but right now, we still have it as a neutral. >> the question is when do they become attractive? anybody who watches cnbc regularly, whether it's the tax cliff we have at the end of the year or whether it's greece being held from the eurozone or spain being knocked down like a domino potentially, there's so much headwind. why if you had cash would you buy now, david? >> look at the next six months. you have overhangs out there. but the group that's overperformed -- when things start to get better, they have a lot of upside. the stress test was absolutely critical and showed the u.s. financial institutions are in very, very good shape r overcapitalized. can pay higher dividends. it's never going to be an all-clear signs. you want to buy into periods of weakness. >> david, i just wonder as somebody who's been following the seshgdz for many years like
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yourself, you have to agree it's impossible to get a full picture. whether you're a shareholder of citigroup in '07 reading their reports and following up or merrill lynch or even jpmorgan now and not really that focused on the chief investment office, how much of a discount are you willing to apply given that impossibility of fully understanding risk? >> we think the risk, outside of the jpmorgan, for many area of the financial sector are going to be more manageable. if you're really concerned about risk, focus on the regionals or the super regionals. the last time everybody got caught with real estate, that's not going to be the case this time. you're starting from such a depressed base. one of your comments you mentioned earlier was did other financial institutions -- are they going to have the same type of risk and problems as jpmorgan? we look at -- jpmorgan was not
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fighting their last battle of having these horrible problems. other companies like a citibank and a bank of america are not putting these on. they remember their near-death experience two or three years ago. we don't think it's going to be widespread. >> thank you both for joining us. david katz and larry adam. we are getting headlines crossing reuters that the white house is saying the jpmorgan loss reinforces a need to implement wall street reform. they can't comment further because it is under s.e.c. investigation. but that is the latest from the white house, using this as a rallying cry for wall street reform here. lots more on the big selloff in just a moment. take a look at the vix here. its highest level since january 16th.
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it will sell international operations to help set it on a path to repaying $12 billion. steve liesman, treasury's gotten back about $5.5 billion. but $12 billion more to go to fully repay. >> the question is whether taxpayers could suffer a loss because of this bankruptcy. the mortgage lender still owes the government $12 million of t.a.r.p. money. but treasury officials are arguing the opposite that the bankruptcy could help get that money back saying that rescap bankruptcy won't hurt taxpayers. the bankruptcy will help taxpayers recover funds because the parent is addressing the legacy mortgage issues on its books. the u.s. already has recovered $5.5 billion, a third of the investment. now, the ceo, michael carpenter
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saying the single-most important thing we can do for the u.s. taxpayer is to not put billions of dollars into this business on a going-forward basis. it was as gmac and the lending arm of general motors. rescap a major lending inside g-mac. creditors include appaloosa, silver point capital and reuters saying berkshire hathaway holds a significant portion of rescap's notes. one of the questions we're wondering about is whether there was that, what were you going to call it, they were going to do an ipo. took it off the books. whether now there's some possibility of an ipo. >> i think that's a key point, steve. also don't forget the sale of the international assets is significant. >> right. >> that was not anticipated. >> right. >> at least not near-term. so they do that, they raise money, they pay treasury back. they put res cap in bankruptcy and try and get the ipo off but they were unable to earlier because of fears about rescap and what would happen. >> is it one or the other, david?
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do they either sell the international stuff or do the ipo or can they do both? >> they'll do both. separately. but sell international and then ipo the business. ally financial apparently is doing fairly well. you know, in terms of the domestic business right now. >> we know auto subprime and auto lending is back, and that the credit returns have been better than anticipated. certainly better than they were in the worst part of the financial crisis. >> all right. steve, thanks for updating us on that. steve liesman. >> now to something completely different. you're looking at a live shot of our new stock exchange logo. you're looking at me at the moment. but there you go. >> there it is. >> that's the new logo for nyse euro net. it's a representation of the world. we'll sit down with its ceo duncan niederauer in a few moments.
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let's welcome duncan niederauer, ceo of the nyse here to post nine at the new york stock exchange. aside from the ribbon cutting, you've been here before. >> a couple of times. >> we have to talk about what is different today, that is the logo. why the change? >> we thought it was overdue to refresh the brand a little bit. i thought we needed a logo that
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more envisaged the community and unlocking its potential and the fact that we are a global company, not a u.s. company and a european company. but one globally integrated company. so we thought it was time. >> i'm not sure if we can take a look at it. for all those big words it's fairly nondescript. i kind of have instantly forgotten what the old logo was when i saw it this morning. and i thought when you change this one i'll probably instantly forget what this one was, as well. how much did you spend on it? >> the good news is a very moderate effort. it's not like we're a bank where we have to change the signage in 2,000 places. it was more of a glyf that looked like a -- >> collection of blocks? >> and you'll see what we do with it from here. simon brings up a big point. we are having a naming contest. so i call it the globe thing. it's not really going to work. so, name the icon at send in your best guess.
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>> duncan, talking about the globe thing you really did try to do the globe thing, as we well know with the merger with deutsche bourse that did not happen. where are we with euronext and your ambitions that have been in swarted in trying to operate certain markets and certain instruments? >> i still think it's a scale business. i still think ultimately the destiny for his industry is to have fewer globally integrated exchanges. that all appears to be on hold for the time being. i think you'll see a few things get done, like the lme transaction, lch et cetera. i don't know if there's a lot of cross border merger activity coming unsoon but i do think it's inevitable. i don't know what role we're playing yet. >> so what are the costs associated with playing this game? how much did the german takeover ultimately cost you when it fell through? >> we -- we were, i think, very transparent about that in the proxy. a little less than $100 million in fees from, you know, all the people you need to hire to help you do something like that. and that's obviously
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disappointing. >> which is more important equities or derivatives to the future of this business? >> ill still think it's derivatives, david. i think you're going to see more regulation on derivatives. i think equities is pretty heavily, if not overregulated already. you can see more of that happening in derivatives. but i think in the long run, unless you believe the commodity boom is over, asia has yet to be heard from in this global consolidation and china in particularly is going to be intently focused on derivatives, particularly commodities so i think derivatives are still the future. >> you still trade a quarter of the volume for the united states on the platforms that you have. you were in chicago last week complaining that you might suffer from the showroom effect. >> right. >> where people can see the prices, like they do at best buy, but ultimately they go to trade. why is that? the people that are selling securities in the dark pools are taking lower prices or simply because the cost of dark pools are less? >> i think what's happening, simon, is it's actually neither of the -- it's neither of the above.
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the dark pools are less regulated. but the point that i tried to make at the cfa conference last week was simple. if someone walks into a retail showroom and can get a better deal for that product for themselves as the customer on their mobile phone, that's something that the retail industry will have to address, right? here, if the -- the way the rules are written the customer actually has to have no veteran experience in the dark pool than they would have here, so it's not like they're getting a better deal or they're getting a lower price or they're getting a better economic cushion. and all they were trying to bring up is, is it time to rethink the policy implications of a fact that the regulated market could be just leaned on as a showroom, and then the trades get executed in an unregulated place at the same price. >> you fear losing the high frequency traders that are very profitable to you. you will now call for less regulation because you think they're going to go play in other areas, abroad? >> i'm calling for a raising of the bar of the less regulated pools not a reducing of the bar
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for our pool. >> level the playing field. >> if you look at our demographics, a lot of that is already migrating to the less regulated pools. i'm looking to raise the bar of the res regulated not reduce the bar of the heavily regulated. >> duncan your stock pays a nice yield. are you committed to that? >> as someone pointed out to me the other day, yield isn't the only thing. the stock is down a little bit. >> right. >> but, the dividend's been very stable. i think people can expect it to stay that way. >> stable as opposed to rising? >> i think it's stable. we target roughly 50% payout of earnings, and i think you want -- you don't want to raise it and then drop it every year, because the earnings can be pretty volatile, especially in the volume environment we're in now. so i think investors can assume it's pretty stable. >> okay. duncan, thanks so much for stopping by. good luck with the new logo and the naming of it. >> enjoy the studio. >> that does it for us here on the ten clock hour. david are you going to join us in the 11:00 --
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>> no, i'm not. if you talk about the ally deal, it is ally. i stand corrected. >> why did we think it was ally? >> i don't know, i said ally and then cramer said al l.e.i. >> and we believed cramer. >> glad we cleared that up. >> i will be seeing you tomorrow. >> tomorrow. all right let's get to it. here's what you might have missed if you're just tuning in. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> are 50 you willing to go all the way to the point where you're going to threaten to leave the euro, you're going to scare the daylights out of everybody? he said i'm willing to go very, very far. because he wants a complete renegotiation. >> we're in for overregulation and the result of this jpmorgan debacle will make matters worse. >> jpmorgan finally has a release out this morning that ina drew, chief investment officer, will retire from the firm. >> i think the shareholders, acting on what you said melissa on friday, should be outraged and want a callback.
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we want some of that money back. we don't just want heads we would like some of that money. because we know the justice department is going to look at it because it's probably nothing crimin criminal. >> kick off a very busy day. >> really involves advertisers learning how to use social media. it's more of a question of timing than it is about whether this is going to be a much larger company than it's ipo'ing at. >> good morning, welcome to the third hour of "squawk on the street." let's get a check on the markets. certainly pretty rough action here at the early going. we are now down, on the s&p 500 down by less than a percent. here on the dow down by 115 points. on the nasdaq down 0.8%. avon leading a few gainers on the s&p today on reports it's considering cote's late's offer to buy the productmaker. and banks some of the biggest losers once again today as jpmorgan weighs on the sector, morgan stanley, bank of america,
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city, wells also in the red. >> the countdown to the most anticipated ipo of the year is on and we've got every angle. two journalists who followed facebook, the social network extensively, will give us their take. plus the boss of all segments is back. our management experts will weigh in on the debacle in yahoo!'s corner office and the shake-ups at jpmorgan confirmed this morning. see what they think it means for the future of the companies. then as rumors of the itv swirl apple stock seems to be at a standstill. has this tech titan gone as far as it can go for now? and we're less than 30 minute now from the european close. fears of a greek bankruptcy rearing its head again, weighing on markets around the world. that is very true. certainly affecting the markets here in the united states. more on that coming up in the next hour. we start with the markets, another triple digit loss for the dow, the s&p and the nasdaq also sharply lower.
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art cashin joins us, director of floor operation for ubs financial services. >> good morning. >> today feels very different in europe. if you look at the european action for the degree of selling that there's been across the board, and some of those big banks, but not all that have been taken lower. does it feel different on the floor of the nyse today? >> sure. because we think the scene has shifted from basically purely financial venues, in to semipolitical. up until now, the governments, and the central banks, have been able to take small steps to delay, or ameliorate what's going on. they haven't been able to cure anything. they've kicked the can. but they could do that by qe, ltros, things of that type. this is now in the hands of the greek populous. and it may turn out that if people believe they're voting not just to protest austerity, but to exit the euro, it could start a process no government can stop. >> what's your basic scenario as to what happens?
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that greece leaves the euro? >> i don't think there's a way to save them unless germany and others decide that it is just too important to keep them in, and just keep paying the bills. but that doesn't seem plausible with spain next up. >> so let me ask you this, the declines that we've had over the past seven trading sessions or so, is that pricing in that departure? or will there be an additional reaction once the news happens? >> oh, it will be significant. >> it will be cataclysmic? the potential is cataclysmic? >> i think that's what kind of held us together in some of the sell-offs. i wrote this morning about what i call the rationale input. after they let the mistake of letting lehman go under. they knew they had to step in and save aig. they've used the qes and the ltros. if greece leaves the euro it could be cataclysmic. it could be lehman on steroids. >> so if you have members of your family collected here now,
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what would you say to them to do if they were stock investors over the summer? would you say because although the risk may be small or however you term the risk, the implications are so vast? or would you say actually you're okay, you'll see it coming, you'll get out in time. it will be a process, not an event? >> well, it will be a process. but it will be a rapidly moving process. and for today, today for example you saw the greek banks get hit very badly because one of the first steps in the process will be a run on the banks. people would say oh, my god -- >> not just in greece? >> not just in dwrooes. >> any peripheral country? >> it will start clearly, it's already begun somewhat in greece but it will access rate in greece. people will say, they're going to shut the banks for the week, print up the drachma and when i go to get my money out it's going to be in drachma. i want it in the euro. i want the buying power of the euro right now, i'm either going to buy something with it or try and store it away. that will spread almost
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instantly to spain and italy. >> that's the fear. >> yes. >> thank you, art. nice to see you. art cashin there from ubs. >> okay. yahoo! ceo scott thompson is stepping down after being at the job for just five months. dan lowe will be one of the three new board members at yahoo! phil george is a professor at harva harvard, sits on the boards of exxon mobil and sachs. guys, great to see you both. >> thanks. >> nice to be back. >> bill, i want to start off with you, certainly yahoo's management history is not a good one in terms of ceo turnover. is this change more disruptive, or is it putting the company in a better place? >> oh, i think it's totally disruptive. it's not just the management that's in a state of turmoil, it's the board, they're having six board members report, dan
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loeb and six others coming on. it's not just scott thompson. this is a company that has no strategy. they've lost the innovative touch. they turned down an opportunity to buy google many years ago. they turned down a great offer from microsoft north of $50 billion. and so i think they don't know where they're going, what they are. >> right. >> i expect the private equity guys will come in and dismantle and take them apart and figure out where is there some value. kind of like can we sell off the pieces? who can we align with? can we sell off the company to someone? >> right. >> and recapture some value. >> i'm going to play, just for argument's sake, yahoo! the fact that they have been strategiless over the course of however many ceos that we've had, this is exactly what the company needs to put it on the right course. and if it does mean dismantling the company then so be it because as a shareholder that means unlocking value and that means a higher stock price. >> melissa you just said it so well i can hardly top you.
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this is one of those times where i really agree with you. sometimes we disagree. bill i usually agree with you. the alternative, i can't imagine the alternative. melissa, you're exactly right. they need this. this is a board that's had some very good people in there. they just were making some bad decisions the chemistry was bad. you had some people who were on perhaps too many boards with too many other crises going on. the chairman up till now at yahoo has been the chairman of northwest during some difficult times, been the chairman of publicist during some difficult times, all at the same time going into the delta merger of morgan scandally. some of these people didn't need the other distractions. here this is a company which is fundamentally a media company. the new people coming on this board understand that. michael walt is a great star who understands the media world. henry wilson is a great restructuring guy, nonpartisan guy who was part of the obama administration, dan loeb really knows how to pull these pieces
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together. looking at doing the right deals with ali baba, with microsoft, there are great opportunities here. they did try to do something with google. the board didn't understand it. terry acceptle who maybe was not the absolutely perfect ceo did more things right than wrong. it was paid highly but did a lot of good things as a former ceo of yahoo to get back on track as a media company. >> bill, at the end of the day it seems to be crucially whether you buy the stock or not is dependent on how quickly you think they can exit there the asian states, and at what sort of price. that seems to be the be all and end all for many people in the market at the moment. >> i think you're right, simon, and so is jeff. they've got to extract value right now. what that means a farm of dismantling. the bad things occurred before. a i you're way too positive about that board. they have a lot of echoes of hewlett-packard. so i would be very critical of that board. >> i'm not positive about this board. i'm positive about the individual people. they're very sophisticated
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people there. ray and from the media world themselves. collectively they're making the wrong decisions. these were honorable, smart, experienced people that just didn't work as a group. >> well, jeff, it's worse than that, they didn't develop leaders. they kept grasping for leaders on the outside. they didn't do their due diligence with either carol bartz or scott thompson. this is not the way to run a company. >> guys -- >> there's a harbinger for facebook here. they're too caught up with the charismatic sway of a founder. they're trying to placate jerry yang and zuckerberg and the way he has on his board. >> i think the similarities, i totally disagree. zuckerberg and the facebook board is doing it very differently. >> we've seen this before. look at mcclendon now at chesapeake. look at lehman. the charismatic sway of a ceo
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can get a sophisticated board to look the other way and do some dumb things. >> well. >> got to leave it there. as always a great conversation. let's get to another market splash out there. what's up? >> fight over acom, because nbc you might have heard of that network, saying it will not renew the fourth season of "who do you think you are?" which uses technology, and of course they get a big push from that. but you got two people out defending the company, goldman sachs as well as u known muenster of piper jaffray saying buy on weakness. apparently people are, stock down 14%. >> thank you very much. got to check in with gary kaminsky our capital markets editor with his own take on what's going on at jpmorgan and yah yahoo. the shareholder meeting for jpmorgan is tomorrow. do you expect any bomb shells? >> let's get to that in a second melissa. let's first faulk about what, if you are thinking about jpmorgan right now what i think you should be thinking about.
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in managing money i always like to think about what are the known knowns and the unknown knowns. in this case it's very important to understand that everything else being equal, jpmorgan is a quantitative analysis. you want to look at what the company's earnings are, what the yield are and maybe this is a one-off situation. but the known unknowns is what the issue is here. you have to understand and i sat in numerous meetings over a decade where jamie dimon presenting to institutional investors and his thesis was one thing alone, apologies to jamie, i think he did the right thing, but this will come back to haunt him. that is he told people risk management and expense control was the -- was the basis for everything in terms of growing that business. and unlike a ceo who would come to the street and tell you, this is how we're going to grow our business. this risk management and expense control mantra is something that you just do not know, how many people own that stock, and that was the primary reason to be there.
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as far as tomorrow is concerned, this issue in terms of what can be said, melissa he's already said. he's already said what he could say. he said it was sloppy. he said it was not the way -- >> he can also say he's going to take a dollar in compensation this year. >> i heard cramer and you talking about that earlier this morning. >> wouldn't that help the situation for the shareholders? the stock is down -- >> you know what? if i'm managing $10 billion or $13 billion and i'm trying to make a determination at jpmorgan whether he symbolically takes a dollar or doesn't take anything, or says he's going to basically work for the rest of the year for the shareholders, that's not going to be the primary decision. the fact is this company had a valuation that was built up over ten years, started when jamie went back to bank one and that's the unknown known. and i don't know the answer to it and nobody does. and i don't think anything he could say tomorrow is going to rectify that situation in the next 24 hours. >> all right, gary. >> we didn't get to talk about yahoo. >> so much to talk about these
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days. >> up next on the program, brand new grades on which airlines are always late and which ones always lose your luggage. plus two people that have been following facebook since well before friday's ipo. we'll see what they expect this week when the company finally goes public. your chance to get your hands on facebook. ♪ here we are, me and ♪ on the road ♪ and we know that it goes on and on ♪ [ female announcer ] you're the boss of your life. 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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whether you like it or not, friend it or not, poke it or not, facebook is down the home
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stretch to going public this week. but it hasn't got there without some hiccups like its ability to live up to its revenue potential or the questions over whether it can leverage its mobile platform. this morning we're cutting through the facebook frenzy, paul sloane is executive director at c-net. and robert armstrong joins us. he's a columnist for the "financial times" next column. i assume you're thinking of some fairly pitty things to say about zuckerberg and the crew? >> i certainly hope so. thank you for having me. >> what is the analysis? >> the short answer is simply that at the high end of the valuation range, $90 billion, $100 billion, the valuation is simply too rich. but there is a much longer answer which is, could we see this company be worth $200 billion in five years? we certainly could. >> let's come back to that in a moment. paul what is your basic position?
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from where are you coming on? >> you know, i think people really don't know how to deal with this one, right? because by wall street metrics, just mentioned, as barron's wrote about this weekend, it's easy to figure out, it's really crazy, really speculative, really expensive. on the other hand the audience is such that no company has ever amassed such a large audience and has so much huge potential. and so far, you know, mr. zuckerberg, at age 28 as of today, has just done a stellar job. >> it has been staggering. i mean it's just been an amazing story, paul. at the same time if i told you the story of a company who was in a social media space and they weren't adequately positioned to monetize the influx of mobile users they suddenly got, wouldn't you say that company was flat-footed and doesn't deserve a premium valuation for operating its business? >> sure. then don't buy the stock. i mean, zuckerberg controls the board. zuckerberg controls most of the voting rights. and zuckerberg -- they are working hard to come up with all kinds of strategies for mobile.
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we'll see what happens. we'll have a -- he'll have a honeymoon period, i'm sure, in which the stock will probably be okay. and people will wait. he'll have a couple more -- he might have a quarter, two quarters, and if he doesn't get the act together 50e8 get punished. that's what will happen. >> robert you laid out the prospect that it could be worth $200 billion down the road. which do you think is more likely, that it continues to grow in value on the market over the next four or five years? or do you think one day people will more likely wake up and go, the emperor has no clothes? >> i think the crucial point to watch is revenue per user. which is -- has been growing quickly, but in recent quarters has decelerated. i would prefer to own this stock after one quarter, two quarters, three quarters, when they've shown that they can consistently grow revenue per user, rather than just revenue by adding users. so, i am happier to take the risk of paying more, having had
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more proof points on this stock, rather than jump innerly. >> robert, getting back to the point that i was making with paul, isn't the decline in revenue per user because they weren't well positioned in monetizing the mobile users that they have suddenlyly gotten? so therefore, the revenue per user going down is really a function of their sort of -- i don't want to say missing the boat because that's a little too extreme, but not adequately understanding how many mobile users they would be able to capture and having the ads to actually help monetize? >> i think that's absolutely right. but i would emphasize that the challenge is actually deeper than that. the promise with facebook is that they build a better internet advertisement overall. that is an advertisement that takes advantage of each user's social grid. and, so that the advertiser gets a very targeted hit on users who are likely to be interested in their particular products. facebook in general hasn't delivered on that broader promise, either. so mobile is a problem. but there's a more general question about advertising on
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facebook. does it live up to its potential anywhere. >> that's clearly the bigger question here. is that they have such an audience. such rich, rich data, and yet they still have not delivered the kinds of value to advertisers that one would think they would by now. >> we'll see what the market makes of it later in the week. paul sloane and robert armstrong. >> thanks very much. >> and of course, do not miss our special show on thursday at 1:00 p.m. eastern, anchored by carl quintanilla on the day facebook is expected to price. >> wow. >> should be a good one. >> coming up next, apple has had a rough run since the beginning of april, down about 6%. now the street is getting even more bearish. have the tides finally turned on this tech giant? and we're counting you down to the close in europe. that's only eight minutes to go. so you've got to stay tuned for that.
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we just want to remark the fact that we are cutting our losses really quite rapidly now here at the new york stock exchange.
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we were down triple digits, as you'll be aware. and now we're at just a loss of 83 and continuing to cut those earlier losses. >> all right. it has been a rocky road for apple over the past month. shares are down 7% in that time frame. one of the key drivers to the sinking stock price and the buzz of a new iphone and apple tv around the corner, should you be buying ap right now. joining us senior analyst at sanford bernstein and holland gillis from bgc financial. great to have you both here with us. colin, i'll start with you since you're here on set. we've made the point before that june is not a very good quarter traditionally for apple but given the potential catalysts around the corner do you use that weakness in the stock for position for later on? >> sure. we would have more concern about apple going lower before it goes higher. we point to that june quarter because you are seeing some iphone fatigue coming into the developed markets. we saw it with at&t and verizon. there's a big sequential increase in channel inventory. the largest ever.
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we're talking about 2.6 million units. there are 8.6 million iphones in the channel right now. as that prugt gets older and in front of an iphone refresh you have to worry about june. >> tony, do you agree with colin in that there might be a better entry point sometime soon? >> i think the stock's going to be range bound for the next couple of months because investors really don't have anything to get excited about this quarter. there's no new product likely until the september/october time frame which is the iphone 5. and in the meanwhile, iphone sales following its introduction are actually going to decelerate this quarter or next quarter. so i think the stock has largely range bound. you know, that said i would really encourage investors to not be too cute with the stock. this is a great, fundamental long-term story. investors were nervous when the stock got to 500 and said the run-up was too big. many got incrementally nervous at 600. but this is a great story trading at a really good valuation price. so i'd be cautious about trying
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to be too cute around entry point. >> colin, the last time i remember you on talking about apple was before they actually came through with their results. >> correct. >> you and i had a conversation at the end i said i was kelped that maybe we saw apple too much through the prism of the u.s. telecomcarriers. ultimately the china offering was actually quite strong and it did actually beat expectations. do you not fear that you might be repeating to a certain extent that era? >> yeah, so, in fact, when we last talked, the stock was about 560. so we really are at that exact same level now. we were talking about a 35 million iphone number which is what we got driven by the strong chinese results. >> but china is a wild card that i don't think americans can necessarily see, can they? >> right now there is the expectation that china is going to be driving results in a roar robust manner particularly as the developed markets are slowing town. the positive thesis is we still have the largest chinese mobile carrier out there that is not carrying the iphone. and that would be the one big
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catalyst for this stock out there. but these subscribers are primarily 2g subscribers, the less wealthy part of the country. this gets back to the all--in cost of an iphone. apple's asp is $650. you compare that to rym at subdid 250, nokia. both those companies have issues of their own, but to maintain asps in increased scales is a very difficult proposition. people are coming after apple with the one level they have, which is price. >> unfortunately, got to leave it there. always great to talk apple. >> we continue to cut our losses here at the nyse. we're now down 64 points on the dow. europe is about to shut off trading. we'll have the latest on that next. tdd# 1-800-345-2550 the spx is on my radar.
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close just happened a minute ago. simon. >> let's get straight to the map. we have cut some of our earlier losses but obviously, the situation is quite dire there. right from the off today you had the broad-based selling on many of the markets there. many of the big banks were down. greece is an issue. clearly greece is an issue. in a sense we're seeing this slow car crash as nouriel roubini would see there. it becomes what the german's reaction would be for the possibility we get elections in
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june and ultimately the rest of greece rips up the deal that they have with the rest of the eurozone and says okay, germans, what are you going to do now? this is where we are as you can see on the session overall. i did think we were cutting our losses actually, but the move is very slight. it's been a rough session. certainly for the london, french and german markets, as you can see. i wanted to just keep pace with where we've been over the year to date. because that's very important. remember, that here in the united states, yes, we had a rough run of it recently. but it's nothing like the sort of track down that you've had on the top 50 blue chips in europe. the dow jones euro stocks 50, which is what i'm tossing to you there. and you will see now that there is almost a 9% divergence, if you take the two of those together, between what is happening in the united states, and indeed within the eurozone. so you continue to see the underperformance or that outperformance depending on which side of the fence you're at. i mention to you some of the big banks were down in europe today.
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let's just have a look at some of those issues there. bank here, of course, is the conglomerate of savings banks in spain that they're attempting to prop up, and in spain and the bank reform is a huge issue today. we have $19 billion is the new figure we have on the amount of money, the top five banks will be pumping into their balance sheets. but it's not enough. everybody knows that more chickens have come home to roost. ing is down, lloyds is down, barclays is down. the uk banks which mimic the big banks in the united states like jpmorgan or morgan stanley in many instances are in negative territory. a lot of focus is where we are with the yields in spain. greece potentially falls apart and exits the eurozone. your question becomes really two things. the degree to which you can create the fire walls, maintain the fire walls so that italy and spain do not similarly fall. the second question really is what happens to angela merkel. for the moment let's just notice that the yield is higher on greece.
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this is a one-year chart that i wanted to show you. importantly we are not up to the sort of levels that we had before the big injection of money for the ecb. now if i frame it in another way it actually looks worse than in december. this is the difference that investors demand to hold spanish debt over german debt. that spread, as you can see, is now higher than you thad. perhaps that worse period for everybody because you've got the continually falling yields in germany which in a sense are -- would flatter the situation otherwise. just want to show you one more thing. this is where we are with hollande and merkel. we believe he will go quite rapidly to see angela merkel who has her own problems at home. the question is how will these two get on? what will the new picture look like in europe. how far can we go or will she go down the route of a growth pact or will germany still stand there, as we've heard out today
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and say, no, you have to have you atersety. those are myung questions and will hugely affect investors here in the united states. >> let's get the latest on what is going on in greece. michelle caruso-cabrera? >> we are awaiting the leaders of the various parties who are expected to meet to make one final try of forming a coalition government and thus avoiding another election in june. however, the leader of the radical left party has reportedly refused to attend this meeting. he says he won't even bother because he doesn't want to renege on his positions that he took during the campaign. without his position, it is unlikely they can form a government and really get anything done. remember, nullifying the bailout program that has been imposed on the greeks in exchange for more than 200 billion euros worth of bailout money. he's refused to participate, but he refuses to participate in the government he says that agreed to a bailout. this could all very well be
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posturing. the leaders of the other parties have said, okay, we'll go back to our rpian partners and negotiate for more leniency but that wasn't good enough, he still said no and political observers in greece say his popularity has skyrocketed since the election and they think he absolutely wants new elections because he thinks he can possibly be prime minister. the deadlock in greece now raises the possibility in a firm way that greece will leave the euro. if they don't get the money they need to keep the country running they print their own money in order to pay their bills. european ministers are talking about it openly for the first time as a possibility, trying to play it down, saying that it won't matter as much as it would have if they had done it a year ago. just this morning, currency analyst said he's done an informal survey of currency traders, 70% now believe greece will leave the euro over the next 12 months. this is important because, greece leaving the euro used to be a tail risk. now many in the market believe it is the central case for the failed future of greece.
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the athens composite is getting clobbered. the banks in particular getting hit hard because if greece leaves the euro they lose their ability to use the ecb for funding. at this point, though, guys, sip far, if you're a greek person and you really think the possibility of leaving the eurozone is going to happen, you take your money out of the bank. we've seen deposits falling but so far nothing dramatic or startling. back to you. >> because so much is already gone. >> well, if you're poor and getting poorer you're taking your savings out to pay your bills. if you're wealthy and worried you've already moved your money. the full-on panic bank run, that hasn't happened. that could be a possibility if collectively the nation and the people started to believe that they were going to be exiting the euro. because we've all seen what happens when a country depegs, right? you close down the banks for several days, your money gets converted against your will and then you're stuck with whatever they give you. >> okay, michelle, thank you very much for that on a rapidly
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moving story in greece. bob pisani is watching the price action here down 86 on the dow. >> it's not the tail risk for greece that everybody is worried about, it's spain, portugal, which is still very, very real. that's really what europe is worried about. we're doing better here today because we're the beneficiaries of that fear, that concern out there. look here again, i came on just prior to 11:00 and said we were coming off of the lows there once again and that's a good sign. here again we've been coming up throughout the day. is it because things are great here in the united states? no but it's less worse than the rest of the world and there's not a lot of other places to put money. once again, look at how the relative markets have been doing throughout the day. we're down about 1%. but globally, germany's down 2%. brazil is down 2%. france is down 2%. again we are continuing to outperform. i'm not saying our economy is dramatically better, but clearly some people seem to think that this is a safer place to put money right now. if you look elsewhere the flight
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to safety trade, when i say you can't make any money anywhere else. when you get a boom at 1.45%. a ten-year note at what is essentially 1.8%. 1.7%. and look at the u.s. dollar. 11 days in a row, the u.s. dollar has been off the dollar index. do you know how rare that is? you probably have to go back four years to see something like that. money is coming our way. that's the point. you could say it's out of fear or because our markets are better, or economy is doing better but money is clearly going our way. here's something very interesting. high yield funds, watch their performance. here's the s&p this is one month, s&p 500 in the white. you notice it's been moving down. high field funds have been very study. this is the hyt, the biggest etf or the high yield funds. morely they'll move somewhat parallel to the stock market, not the bond market. these are yielding about 7%. and people are continuing to
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keep their money in to at least for the moment, there's no concern. finally the vix today a lot of people pointing out we are up on the vix. but again still somewhat modest moves in the vix futures if you look a little further out there in jub, august, and october. guys, back to you. >> all right. thank you. bob. >> capital market, gar i kaminsky up next to talk chesapeake and china. >> maybe a little yahoo, too. i can't help but reflect back on last week, obviously europe continues to be probably the most talked about subject but there was a lot of conversation, especially after presentations by dan loeb, and this was in the middle of last week in terms of what was to be expected with yahoo! and then chesapeake. one of the greatest conversations, one of the greatest stocks that everybody wants to chat about right now. with chesapeake, the fact that carl icahn, a great activist, great stock trader may or may not be involved, the issues at
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chesapeake are about leverage. it's a very different situation, as we've tried to point out for some time here now, they're going to have to try to delever and sell assets at a time where it's an unfavorable marketplace to do so. so whether an activist is involved in this situation or not, it's not necessarily going to change any of the fundamental issues that this company is facing. that's the important thing to remember. so remember carl had made a successful trade in this name a year ago. it is the tendency of all traders to try to revisit names they were successful in. it's a great feeling. let's try to do it again. the situation is very different now so don't get caught, in my opinion, into what is a very different situation a year later. >> all right, gary, thank you. >> send it back to hq and brian sullivan. >> i want to take a look at gold. not because gold is making some gigantic move today. gold is moving down, but with today's down move, gold is now negative for the year, and many of the gold stocks maybe haven't gotten as much attention because of chesapeake and yahoo and you
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name it. look at that. gold down 1.3%. look at those down moves too i am gold down 33% this year. newmont mining down. wonder to hedge fond giant paulson is still long gold. if he is, it's not been a moneymaker this year. the shine is coming off gold over the last few months. >> always witty, brian. >> shine. >> yeah, we got it. straight ahead how mark zuckerberg's wardrobe choice ignited a whole new economy. we're digging deeper into hoodiegate 2012. that's next. [ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow.
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all right coming up in just a few scott thompson's out at yahoo. ross levinson is in at least on an interim basis. yahoo investor and a top analyst who've both been bullish on this name tell us if they're changing their minds and what the shake-up now means for the company. plus financials continue to fall but is there a bottom in sight? our traders make that call and lots of key earnings this week. get the setup for groupon, jcp and many more. melissa we'll see you at the top of the hour. >> all right. we look forward to it.
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scott wapner. >> right now everybody knows about mark zuckerberg's famous hoodie. what people don't know is the effect it would have on the u.s. economy. jane wells is live in palo alto looking at the hoodie economy. going, jane. >> simon, facebook's old offices were in this building which now houses a company that sells, yes, hoodies. and this, america, is the new power suit. the $148 executive pinstripe hoodie giving new meaning to leadership style. a good gift for mark zuckerberg on this his 28th birthday? he is known to be a man of modest tastes, drives an acura, lives in a relatively modest house. has one unusual potentially expensive interest is hunting. here's a photo that he calls the great goat roast of 2009. maybe get him a cross bow. i asked for gift ideas on twitter. here's what i got. for his 2th birthday a 28% tax rate but he doesn't have that. a hoodie tux he'd do, shoes with
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laces? maturity from real don johnson, a shirt and tie from handicapper bill and a break from deckerberg's hood. here in silicon valley, if you look around, most tech workers are surprised anyone cares what zuckerberg wears. >> doesn't follow the crowd. i don't think he should. >> doesn't seem like he's done anything conventionally. i doesn't see why there's a big problem with it. >> if you got the power you can pick your suit. >> i think mark zuckerberg showing up on wall street in a hoodie is awesome. >> awesome, man. the executive pinstripe hoodie is made in san francisco. i got the last one. ceo chris linland telling me the first batch was snapped up by businessmen from far and wide. they are now taking orders on their second batch which they'll deliver in june. it's on fire, guys, quote undeniable proof that facebook
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will single handedly rebuild the u.s. economy. they don't make them for women yet melissa. >> $148? >> for a top and a bottom, jane, a whole outfoot? >> no, no, no. just the top but you have paisley lining. >> nice. >> paisley lining. >> you look like an executive, jane. >> oh, yeah. very sharp. >> thank you very much. up next we'll hear from the group who's been fighting against big banks since october of last year. see what occupy wall street has to say about jpmorgan and jamie dimon.
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as the fallout from trading losses continue to shape up jpmorgan and we've had further resignations today advocates for a stricter wall street oversight are intensifying their efforts for stronger regulation. michael king joins us now, executive director of strong economy for all, which works with the occupy wall street organizers, and co-founder of
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occupy the s.e.c., the group within the occupy wall street movement focusing on financial reform, and arguing for a more strongly implemented volcker rule. good morning to you both. >> good morning. >> wur both lawyers. >> we are. >> so you both say you're not part of the 1%? interestingly enough. michael for you guys i suppose what happened on friday or thursday with jamie dimon was a gift? >> well, it continues to express the broad public concern about these issues. and i think it's a crisis of credibility for the banks. we've said all along that what the banks are saying doesn't mesh up with reality. it's clear dimon said this was a tempest in a teapot. it's a multibillion dollar international scandal. he said that the chief investment office protecting jpmorgan chase. it was actually like an anti-virus program that was infecting the whole organization. i think it's questionable whether you can take anything these people say seriously and particularly on matters of public policy. >> yet it was a very small amount of money if you look at
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the balance sheet of jpmorgan overall and a lot of people are taking a lot of comfort from the fact that jamie dimon came straight out about it, put himself on the line, said we made a mistake. he didn't wait until the end of the quarter, as soon as it was a material loss he was there. he was on a conference call, and taking the hit in public. that's very important for a lot of people. >> it's definitely out there. but i think the raises public concerns. it's $2 billion. now we're hearing it may be $4 billion. you know, this is something that folks from across the ideological spectrum have been concerned about, occupy wall street, the tea party, all the voters in europe that just went through the elections. i think people are concerned about these institutions, and the extent to which we're going to have public bailouts or private losses. the extent to which this is going to damage the real economy. >> the white house has already come out this morning saying about what happens at jpmorgan strengthens the case for a wall street regulation. at the same time, what jpmorgan did in the way that it intended to do it initially may not
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necessarily fallen der the volcker rule. the need for banks to hedge their positions doesn't foul under the guise of proprietary trading. what it became may have been but there's always failures of execution. >> right. >> how can we say that this is fodder for this case. >> you raise a good point. the volcker rule in the format it exists at present is actually kind of like swiss cheese in the number of exemptions that it has. the volcker rule, you can call it a telephone game by the time it went from paul volcker to obama to congress to the regulators. it has many exemptions that can be taken advantage of. one of the exceptions that exists, since we're hedging and hedging is allowed not at the trading desk level but also at the portfolio level. i think that's what we've seen here. obviously there's no such thing as a perfect hedge in many cases. and the higher up you go at a macro level, the less precise
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the heck can be. >> do you feel that you're speaking with emotion and power and ability to actually change things or is this a movement very much at the sidelines? >> oh, well we certainly are there. the need for financial reform is a strong -- >> i didn't hear this two weeks ago, three weeks ago from you. i didn't see owen the streets making this a point of friction, trying to make change. >> or in april when the reports about the cio office and the large outsize positions were coming out, maybe you were out there talking about it and we just simply didn't pick it up. but we didn't hear you saying cio office making a big bet they're actually moving the markets, this could be a danger, we need to bring this in. >> we've been talking about this and other issues for months now. this report, this story first came out about a month ago, a "wall street journal" article. >> right. >> we were on that at that point. you didn't get the publicity necessarily but this has been an issue, this is not the only issue, just one symptomatic
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event in a larger, systemic problem. >> we're out of time. thank you both for coming in. thank you. >> all right. meantime it is mark zuckerberg's 28th birthday today. we want you to write a horoscope for mark. all energy development comes with some risk, but proven technologies allow natural gas producers to supply affordable, cleaner energy, while protecting our environment. across america, these technologies protect air - by monitoring air quality and reducing emissions... ...protect water - through conservation and self-contained recycling systems... ... and protect land - by reducing our footprint and respecting wildlife. america's natural gas... domestic, abundant, clean energy to power our lives... that's smarter power today. of how a shipping giant can befriend a forest may seem like the stuff of fairy tales.
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time for squawk on the street. facebook ceo mark zuckerberg is celebrating his 28th birthday today which means his zodiac sign is taurus. we asked you to write his horoscope. ravel tweets many people will look to you for fashion and financial advice. though not necessarily in that order. and andre tweets even though your ipo is overhyped it's important to remember that you have 900 billion friends. >> good one. all right. take away time. gary kaminsky what is on your radar? >> let's talk about facebook. the consensus opinion among biggest hedge funds, putting in the 10% orders, is that this thing will look, if we take the


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