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tv   Squawk on the Street  CNBC  May 22, 2012 9:00am-12:00pm EDT

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the 1% or the 99%? >> the 99%. you go straight there. >> to me, it seems like the numbers are 2in your favor. >> plus, you can get the pac. >> right. free speech. free country. >> all right, larry lindsey, make sure you join us tomorrow. ♪ >> good tuesday morning, welcome to "squawk on the street." david faber back with the new york stock exchange. we're looking at a continuation of yesterday's rally. take a look at how stock features are shaping up. the best gain, in fact, since april 17th. we got the dow pointing a little bit lower, but the s&p and the nasdaq do look to eke out a gain. three narrows across the board. this is the second day of gains.
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>> tuesday road map starts off with the market's bounce. best day for the nasdaq all yearlong. is it just the latest in a series of lower highs and lower lows? bfa today says we still need to see capitulation. >> we saw some very nice gains protected. despite that, yesterday, facebook fell 111%. >> nasdaq faces its own shareholders. is it nearly enough? >> and bestbuy, it is falling here pre-market after it did with the earnings estimations. can they stop the arrivals like amazon or are there still doubts as a lot of the top executive positions remain open. we want to start off with the markets here, hoping to stay in the green one day after the dow avoided its 13th loss in 14 sessions. the nasdaq experiencing its biggest percentage gain since december. it was the best day in all of 2012. the european markets rising
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despite the oecd warning there's a risk of severe recession in the 17 country euro zone. what was your interpretation of yesterday? >> i think you had to cover your sure going into the end of the month where we've had severe mark up in the last -- not the last three days of a month, but they do come in. mutual funds that do well, they want to move stocks. this is time honored and illegal thing that they do, but the government seems to have let that go. i think that if you wanted to be sure into a european meeting, you had to know that europe would do nothing. and that's too dicey because every time their backs are to the wall, they tend to do something. i was chatting with my colleague, david faber, and you looked at me quizzical. >> yes, i think quizzical is probably the right characterization. and i think nose who have been quizzical for the last two years would have been right to have been so. and i will continue to be quizzical. >> well, you have the organization for economic
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cooperation saying these negative things about the economy. but, also, saying listen, it is time for europe on jointly guaranteed funding, this is the beginning of what you might think is a marshal plan and perhaps we need an fdic in europe, continent wide -- >> run on the banks. >> right. where you get euros. >> you need something because there are going to be greek elections in -- well, i should say -- >> greek elections. >> right. we may know something. believe it or not, we may be there where we get an answer yes or no in terms of will greece exit or not. they better be ready. >> right. you talk about having their backs against the wall. is the kind of capital flight that we've been seeing, is that enough? is that what having your back against the wall looks like? >> deutsche banks saying there's no capital flight. they're saying guys like me should shut up. i feel like -- actually, like they should go tell my mother.
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i'm not going to go into a shut up mode. there's lots of capital coming out of banks. if you had money in a spanish bank, the best spanish bank, you wake up one day and you find out you have pacetas and not euros, well, you're a bozo if you let that happen. it's rational. that's what's changed. >> right. those who start a bank run may be irrational. but those who participate in a bank run may be rational! right. having some euros in your mattress beats having it in the bank. until they change that equation, there's going to be a run on mattresses and banks. >> the sentiment that continues the run, doesn't it make it so you don't have euros at all? >> well, i think that if they do something and they say, look, if you keep your money in these banks, you still are going to have euros.
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if they kick out greece and have a firewall, there's a series of things that they can do. these are all things that the germans have said over and over again we're not going to do. one of the thing that is's really interesting. we all tend to think that this is a big crisis. if you're in germany, you've got great employment. you just had volkswagen. you had an unbelievable quarter. you have tremendous ability and you have these countries that have to take your product. i mean, germany is where the market is up big. germany is great. germany is benefitting from the chaos. as long as they're benefitting and they don't have to do the republic thing with the wheelbarrows and the deutsche marks, why should they change. this is a great time to be in berlin. >> well, because if they don't do something, it may all fall apart. and, believe me, they have an extraordinarily low currency. if it was deutsche marks again, it would be much more highly valued and their export-driven
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economy would be hurt, to say the least. that's the argument that merkel has to make. all of this comes back to politics and comes back -- i mean, do you have faith in the politicians to figure this out is this. >> no. not at all. >> okay. then i remain quizzical. >> well, while people are still quizzical about facebook after yesterday's 11% drop, reports say analysts of several firms, including morgan stanley, cut their revenue estimates in advance of the ipo. monday's decline wiped $11.5 billion off the social networking giant's marketing value. these reports out of reuters told big clients in advance may have furtherer dampened enthusiasm for this issue. >> look, to use fiasco to say disaster, i'll take any one of these. i mean, there's everything that could be wrong beginning with the moment that gm said we don't want to be in has happened here.
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and if you liked it -- even if you liked it -- you can't like it anymore. and if you didn't like it, then you've really got to start thinking, wow, is there a price i can pay? >> if you liked it before, it was on the hope that one day it will monetize. if you're hopeful then -- >> well, this is only the price action that has changed. >> well, listen. i think that you can get tainted. we're in an ephemeral game. i've listened to -- i don't know if you've ever heard him talk during squawk, but he's talking about it and he lived through the 1999, 2000 and his company is profitable. but we're struggling with the fact that morgan stanley is noting tight. morgan stanley botched the deal. and then nasdaq botched the deal. the investors are frightened. we do not have a clear path toward mobile. suddenly, you just say hey, you
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know what, why do i need this at a time when i really need germany to do the right thing. remember, it is a stock. i do want to come back to what i said. do i feel -- and i know i've got to stick with facebook. i know that germany is going to have to do the right thing eventually. i doen't know what facebook doe to turn this thing around. >> it's as simple as the next quarter. we all speculate. >> if they have a good quarter, than -- >> well, that's what google did. >> mark zuckerberg is only 28. he's not worried about quarter-to-quarter. >> i want to be zuckerberg, i don't want to bet with zuckerberg. now, i can't be him. >> all right. let's -- this was priced very close to the multiple that amazon commands. by the way, others have made the solution to amazon in its early days from its '97 ipo. that came down to something like
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$1.30 in '9d 3. 93. that's a company that doesn't really care that much about what it's doing to shareholders in terms of investing quarter to quarter. >> even now, they spend money for fulfillment crepters on robotic arms and they don't care. >> but they could show unbelievable profitability if they wanted to. and they've elected to think about the future. could facebook show unbelievable profitability? >> by the way, do the split adjusted, it was a disaster to stay long amazon through this. maybe facebook has to have that same test before it really becomes -- >> now, you did say last night at 30, it becomes a plain old buy in your words. >> well, i think that -- at 30, the gross stock guys will come in. now, is this the greater fool theory? yes. when the growth stock guys come in, you have to buy into their methodology to own it.
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i've compared, last night, eaton, cooper to facebook. eaton, arguably, may be selling right now at eight times earnings with a good dividend and seasoned management. how can i not favor eaton cooper over facebook? >> the fact that facebook had an 11% decline on the day of the s&p technology snapped a 12-day losing streak? finish on the highs of the day and facebook finish on the lows of the day, that really seems to underscore the at least temporary hatred there is for facebook shares at this point. when you have an 11% decline -- >> look, it's all in the wrong hands. it's a hot potato. the company didn't do a good road show. suddenly, you go back and realize, wait a second, maybe this was like all the other social media companies that became public. which were, by the way, disastrous. we've got a company that's going
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to be on our show later, m&m, that was a disaster. all of the deals that have come have lost a lot of money for people. and this now seems like still one more of them. >> well, the aftermath of the troubled facebook offering continues. it also makes nasdaq the stock to watch today. the exchange shareholder meeting is getting under way. the ceo saying he was humbly embarrassed by the facebook ipo glitches. nasdaq setting aside $13 million to resolve bad trades as it tries to repair damage to its reputation. $13 million does not seem like a whole lot of money when we were talking to tom joyous who said $13-15 million is what they saw? >> there are three or four firm that is lost say up to 30, $40 million. so obviously, this is not enough to make good. the nasdaq, i feel, has gotten a very big pass here. >> you think they have gotten a
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pa pass? it's funny, the stock was up yesterday. >> i think the market is saying hey, you know what. so they had too much champagne. it ought to be that great champagne they make in flint, michigan. >> i'm not familiar with that. >> yeah, yeah, that stuff is real good. tingle pink michigan champagne is about as good as it gets. >> so whether or not they're less competitive in the future is not as material as some think. and then we'll see. maybe we'll get an update today. >> listen, i go back to the failed bid for the new york stock exchange. let's not forget that where everybody said you've got aent trust risk, there's no way. and they forged away. they were told by the antitrust authorities, no way. and, you know, here, again, i don't know. i'm interested about the future and whether that board would step up and do anything or say anything. i mean, what's the plan here. nasdaq is still very small.
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they haven't been able to merge. they screwed up the facebook ipo. >> you think it's make like kamikaze-type management? >> it's corporate america. he'll do fine. he'll continue his job. jamie dimon continues with his job. you're in america. you cannot lose your job unless you lie on your resume. i'm saying, everyone does well. >> it's hard to be expelled? you need to have an affair or lie on your resume 1234. >>. >> i think that's it. but if you just screw up running your business, you're fine. >> or you become executive chairman or something like that. >> she's still there. i mean, you know, she's still there making important decisions. it's really rather amazing. maybe we need romney to come in. i do feel -- but not off topic nationally. i think what's happening is in
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this country, we're all getting tired of guys. jamie dimon did get his pay package approved. corporate america is unique. when you're at the top in corporate america, you make much more money than everybody else, you live like a king, it's almost impossible to get you thrown out, there is no justice by what average people watch. and i just say let's just call it like it is. it's a great thing to be a ceo because you're almost accountable to nothing. >> you don't think greifeld should be ousted because of this, do you? >> no i'm saying he'll probably get a raise. everybody that's go inc. to get a raise gets a raise. corporate america, the shareholders don't play much of a role. this is the world that we're in. i say this because why does volume go down? why have people left this market 234 droves? is it because they have great roles in voting on ceos? is it because people think it's fair? no, it's just a big ripoff.
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>> pay packages are more towards tracking results. >> that's not a great example. >> you make millions if you're a ceo. it's still unbelievable to me that the guy lost his job at yahoo. i mean, that was an activist. >> that was a trust issue. >> and that also came down to him. i mean, he probably could have figured out a way to keep his job. >> do any of you really disagree that it's not a great -- that -- >> it's a good thing. >> i mean, it's just fabulous. you've got to own that. i think people at home are saying, jeez, you know, i get fired when i make -- i make 60,000, i make a mistake, i get fired. these guys make 16 million, they make a mistake and they get 18 million. >> i'm just saying there's a sense of an amazing thing between the dichotomy between the person who goes to work every day and gets fired and the
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ceo goes to work and gets a raise. it doesn't seem right to me. >> we'll talk about best buy in little bit after the results from this morning. interesting on domestic online revenue. but in the meantime, a "squawk on the street" exclusive. mill len yal media. soared. where does facebook fit into the mobile ad firm's future? we'll talk to the chief executive in his first television interview since going public when "squawk on the street" continues.
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annual shareholder meeting right now just days after the exchange came under fire for how it handled facebook's ipo.
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>> melissa, we're just getting comments from ceo bob greifeld. he's commenting on the strength of 2011 because that's the year that this meeting is set to address. he did flinch a little bit when he said even though the year was of extremely low volume and decreasing volume that nasdaq was able to maintain its strength in that environment. of course, low volume is obviously better environment than high volume as we saw on friday. now, he did make a mention of facebook's trading glitch in his opening remarks, if only to say even in the face of what happened on friday, western digital switched its listing to the nasdaq and announced it yesterday and said our value proposition for listing here has never been stronger. of course, listing fees only make up for about 14% of nasdaq's annual revenue. so you know that shareholders are going to wonder whether this will affect their ability to attract those valuable listings, you know, going forward. but more so, with the liabilities are.
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how much they're going to spend dealing with the facebook trade and the fall out from that. nasdaq has said it will be about 13 million. those estimates from the people who's talking to could be as high as 200 million. carl? >> wow. so friday was embarrassment, but they got western ditch. >> there are others that also transferred. they want to play up the names. and that's already happened in the first opening remarks of the meeting. >> we haven't really seen the impact of what happened with facebook at the nasdaq. >> and you won't. it's always going to be a lagging indicator. you'll have to look at the ipos that come out and the percentage that go to the nasdaq versus the
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nyse. >> kayla, thank you so much. imagine you're nasdaq, okay. what's your pitch to the next big ipo, like twitter, for example, to get it to list with you. tweet us at cnbcsquawk st and we'll air your responses throughout the morning. cramer will show you the way, get ready for his mad dash and taking one more look at futures as we bounce off the best day for the nasdaq so far this year. back in a moment.
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time for the mad dash on a tuesday morning. looking at best buy, down 18% so far this month. a little bit of a balance. >> right. i think people want to look at the earnings and say wow, i was taught very early on by a guy named joe ellis at gold mman s h sach's is how did your store do last year. those that want to bottom fish do some analysis about how comparable stores do the tale. you must have comparable store growth in order to be bought. i don't want to buy it. >> same store sales were down. but domestic online sales were up 20%. >> they're still the amazon showroom. here's my conclusion. mobile phones were really good at best buy. go buy apple. you like best buy? go buy apple. >> jp morgan senate banking
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committee today began v-trading. >> i want to say for the first time because of the yield, i think you can actually own it. the fact that everyone has cut their targets, i don't think that jamie dimon -- if you get anything out of europe that's good, you may want that crazy, nutty position that hurt it. the credibility has been incredibly damaged. this has now become the cheapest international bank. i don't like the international banks, but i would not sell it anymore. i don't want to sell it anymore. it's kind of a bad company but not a horrible company. >> and this is what some of the gains other banks are going to see. >> yeah, you can make a lot of money shooting against anybody. >> can we continue the ral lee that we started yesterday? the s&p 500 with the opening of facebook and apple when "squawk on the street" continues.
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opening bell just a few seng seconds away. it's down about 6% hanging on to the gain this year of about 2%. there's a look at your s&p 500 at the top of your screen. over here on the big board, celebrating raising over a billion of gross equity in the nyse. and the nasdaq, in charge of cancer stem cells. >> a lot of retail to look at today. >> yes. whether it's ralph lauren, urban out fitters. >> i think that ralph lauren did a fabulous job. william sonoma, these are both high end. initially, the stock drop 10 points and now it's working its way back. obviously, fantastic sales numbers. contrast that with best buy. contrast that with jc penny.
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express, obviously very bad numbers. lowes was really bad. >> has your confidence in the home improvement thesis been broken? >> no. >> after home depot and lowes? >> no, i think they were on the actu actual earnings call, i thought they were quite positive. >> so that 10% decline or so was justified, in your view, on the stock? >> lowes is having real problems. they had a turn. the turn was going great. they took a lot of share in a lot of different categories. i think that home depot is expensive. when they get it right, 12% accounts for sales pretty good. the new end today, 31.73.
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i talked to an analyst who had on the show who officially coverage yesterday. his downside was $33 and he stuck with it. i said look, you're a dollar away from 31 here. i think you're 33 at the close. he said i think it's going to be extremely choppy and vol time. >> they issued too many shares and increased the price. in this case, it's an example of why you don't do that if you're an underwriter. >> sellers lost. buyers lost. typical of these social media deals. it's funny. sit back and you can say the things that historically were not said that have to be said. morgan stanley did a bad job. jp morgan did a bad job.
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that's okay. these people are not supermen. i worked at goldman sach's. you work at these companies, it's no different from a sports team. holy cow, we really did a bad job. but you don't say it on air. do you think the nasdaq should have come out and been more forthright? maybe there are legal reasons why they couldn't do that? >> you have to buy them off because no one wants a trial. corporate america is shrouded with lawyers who want to say at any given moment, do not tell the truth. don't lie. just don't tell the truth. >> and then an allocation.
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they're not around. this is another example of why they might not want to participate. where they get allocations, a lot more than might have been anticipated. >> all we dead was talk about gm and concerns about mobile and slowing sequential revenue growth. do you honestly believe this was hyped overall? >> look, go back to the late and yes, phenomenal mark hanes. he said, listen, this one is ridiculous. this one is ridiculous and people didn't listen. they didn't listen until -- >> oh, no, they didn't care at all.
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remember questioning amazon? >> but don't you think someone learned here? i mean, the public clearly re realized the fact that nasdaq blew it. >> at 32, we would have been in the sweet spot of the original range. >> exactly. >> and now, because of the taint, it has to overshoot. this is an emotional business. facebook is known as a loser. you can't change that trajectory until you report a quarter. now it's tainted and people don't want to show they own it. it's near the end of the month. you're a mutual fund. hey, i picked up a lot of facebook on the deal.
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that's how you get fired. i mean, it's very hard to get fired. if you're really rich and really powerful, it's hard to get fired. >> all right, let's go over to bob and get a little bit more on what is moving this morning. >> look, everybody down here is still talking about facebook. and they agree. it's an embarrassment for morgan stanley. can i just have a point about nasdaq? the idea that somehow traders didn't get orders confirmed on friday. and this may have affected some trading in facebook? some might have not traded or traded might have help affect the price. that's true. but not on day two and day three. so most of the people down here, and i called this morning and said hey, it gets further away from that friday. it's more like a problem with m morgan stanley.
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and saying we want a list of infrastructure project. we want to start fast tracking. this is according to a chinese newspaper this morning. and a bridge to nowhere? that's going to be easy. they'll build a bridge to asgard. that may make a difference. the eu summit, it's this mourning. you should see the list of projects out there. not just euro bonds, but backing expansion of the european investment bank. but project bonds, individual, infrastructure. the whole world is on infrastructure that are backed by all the eu states. a back door to the euro bonds. not just fighting inflation.
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a dool dan date. all sorts of crazy proposals. and all i can say is merkel is going to come out of this 6 inches shorter if she doesn't start swinging back much, much heavier than she's been. finally, i just want to pick up on this retail debokle. you would think express was going out of business. down 22% as i was coming down on the floor. down 22% as i was walking on to the floor. what was the great sin they did? they missed by two cents? 47 cents? sales were up 8 pvnt. they're taking any stock that has even a few cents and misses and still takes them out and restoring them. okay.
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chipotle is doing okay. some of the buying companies like gnc, for example, are doing okay. retail traders are shifting money around. but good evening, none of these companies are going out of business. some of them misby two cents. jim, back to you. >> incredible. i looked at express. meanwhile, a big investigation over your mexican division. and nobody cares. 52 week high. rather amazing. real comeback there. people say they're taking it to the dollar stores. if you get it right, they're going to give you premium mobile. if you get it wrong, there's no price that they won't sell it down to. let's shift to bonds and the dollar. rick, take it over. >> if you look at a two-day chart, jim, of ten-year note yields, they're a bit elevated, as you can clearly see. but at $1.78, let's put it in perspective. today, should we settle under
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$1.80, it would be the 7th day in a row we've done that. and there was one day in there where we settled under $1.70, which is a smidge under. fitch today downgraded japan's credit. no real surprises there. but they are a bit below moodies and s&p. traders are quick to point out it's about quantitative easement. jim, back to you. >> let's check out the latest with energy and metals. sharon? >> we have a little bit of strength in the dollar and that, of course, is helping to pressure oil prices.
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but keep your eye on brett crude, those prices are basically flat. traders are trying to anticipate what will come of tomorrow's talks in baghdad between iran and u.n. security council members as well as germany about iran's nuclear program. we already heard from the international atomic agency which met with officials over the weekend. there has been some agreement reached on nuclear inspections. and that, some are saying -- irie rain yan officials are saying keep in mind that oil embargo goes into effect july 1st. the u.s. and europe saying no, we're not going to make any changes to what we want to happen. and so we'll have to see what happens tomorrow at those talks in baghdad. that is going to be the key data point, the key point that is going to determine the oil price range traders say.
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>> you may remember august of 2011, one of the largest deals of the year. and certainly one of the more curio curious. >> people are say whag are you going to do when you want to close down the manufacturing. >> you won't see mobility trading any longer. authorities signed off on the transaction. that was the long awaited and last of a long line in antitrusts authorities that needed to take a look at this deal. and so it is now google. and we have a blog posting. underestimate its significance in the longer term. many users coming online today.
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>> that's why it's a great time to be in the mobile business. that's why he's confident dennis woodside, the new ceo, a long-time googler, by the way, is taking over. he is no longer running the company. >> dave, two thoughts. one is could facebook issue that same statement that was by page, which is that mobile is the future? i don't think so. second, antitrust, google, they have 70% plus in europe. people tend to have long views.
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explain why it is procome pet toef, so to speak. that can be a very important development for google shareholders to keep on their rad radar, what happens with the eu and whether in fact they do take action there which could then ensue in the years in the courts. >> what the facebook effect means from millenial media. we'll talk exclusively with the ceo since his company's ipo. as we head to break, take a look at facebook shares. they did break into the $30 mark. 30.98 is the fresh look. it is down by 5.9%. stay tuned. [ male announcer ] we imagined a vehicle
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>> another light lower. down to 32.10. it did hit 30.98. it's down by about 5.5%. >> we've got to keep a close eye on facebook obviously because it's center of attention. but one of the concerns being talked about for this company is its mobile strategy. putting the spotlight on another ipo, millenial media which was red hot and now is cool. is it going to be bottoming? it serves more than 90% in its debut in march. since then, its shares up down about 3%. the company's present ceo paul palmieri.
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this is his first tv interview since millenial media became public. last week, right before this deal, general motors, third largest advertiser said you know what, we're not getting any traction in these ads. is that because gm didn't know what it's doing? or is that because the ads don't work? i think you're talking about pc advertising with facebook. so my expertise is more along the mobile side. but, you know, what i would say is advertisers change their opinion many different times. >> the first thing my 20-year-old said was dad, listen, if you ever click on an ad, you're an idiot. it's because you have a fat finger and you don't know what you're doing. we don't need ads. it's the greatest thing in the world, we rip off everybody. what do you say other than the fact that, wow, she's clever.
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>> what i say is maybe she's clever, but the five times click through rate that mobile ads see versus online is voting in favor of mobile, to be frank. what was the last mobile ad that you saw? >> i actually looked on a mobile ad. i looked add it and found it favorable. i'm not going on 90. i do think i'm not as clever and don't regard the robin hood principle to be regarded. >> i agree. that's the great thing about the mobile model. in the online space, everything was free and su porlted by advertising. in my view, more supported by search than display ads. in the mobile space, right from the earliest days, consumers were buying ring tones, buying games. and now, mobile monetezation is really what's taking hold.
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30,000 apps carry our software development kits and we're seeing incredible growth. >> so you can speak to -- you know, we continue hearing from companies saying that they can't monetize and when they switch over, there's a forfeiture of profits. how do you get over that? why can you come on saying we are making money and people are clicking on these ads where as a google and a facebook aren't finding the same success? >> 56% of that market is google, millenial and apple with millenial in the number 2 position. so i think google is monetizing google. the technology is difficult to do. no one has gotten scale of this business other than google acquisition.
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apple bought a company called quatro. specialists in mobile monetization. and the specialists with different flavors of the operating systems is what's difficult to do. it's what we've focused on. >> google just bought a company called motorolaa mobility. is that going to change the technological barrier that is you're talking ab? what are your expectations? i think what goes on is a little bit different matter. we're very excited about the an droid marketplace. and, you know, i think having a hand set company under their wing will help them market that product. but, already, android has a lot of steam in this business. >> how do you know -- people talk about the education of marketers and ad partners who are looking at rois that will get better in the future.
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how will you know when that maturation process is gaining traction, gaining steam. bl. >> well, we see it already. somebody who focuses on mobile monetization, there are segments on the phone or video and where we have data that you need to monitor like location is already commanding a premium to online. and so that along with some of the rate like the consumer insight studies says that mobile has a brand new recall. all of these things are helping. so i guess what i'm saying is is it really necessarily a mobile monetization problem? >> you mention some of your competitors have been acquired by the likes of google. i'm going to guess that you're going to remain a publicly traded, independent company. but what are the advantages of
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remaining on your own? you're a billion dollars, so you could easily be acquired by a facebook, let's say. >> well, the first advantage, i think for us, is we have a large market share. we're in a marketplace where we've done very well as an independenind pen dent. one of the reasons for that is we're not tied to one operating system or another. so whether it's developers who want the same solution for moneti monetization or whether it's advertisers, the independent solution is the one that's resonated. >> the stock is millenial media. mr. palmieri, thank you so much for being on the show. >> we'll get six in 60 after a short break. crossed above the 2. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus. tdd# 1-800-345-2550 i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones to help me find
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somebody's coming to the defense of chesapeake. >> this stock is worth five times what it's selling for. atlas energy saying listen, we're interested in buying property. that said, it's too opaque for me. i just don't know. the kiss of death is once the inventory, you've got to sell,
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sell, sell and that's what people are doing. >> look, when apple goes up, people waunt qualcomn. that's what's happening. >> nothing ever matters. people doing things without any accountability at all. >> this is the great growth story of our time for oil because they have eaglefor which is as good as saudi arabia. >> domestic security, i'm talking about con ed, i think the exact target, et, similar to millenial media, this is a way to be able to use the web in the cloud to be able to get your word out. we'll see you tonight. >> thaupg. >> a lot more squawk on the streak after the break. reak.et . because in this business, there are no straight lines. only the twists and turns of an unpredictable industry.
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just imagine our potential... ...if the other states joined them. let's raise our scores. let's invest in our teachers and inspire our students. let's solve this. welcome back to "squawk on the street." breaking news from the national association of realtors. existing home sales rose 3.4% in april to a seasonally adjusted annual rate of 6.2 million units. sales are up 10% year over year, so slightly above expectations.
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now, here is your headline. the median home price, $177,400 in april. this is an increase of 10.1% year over year. but, wait, this does not mean that home prices across the nation are up 10% from a year ago. this is according to the realtors, a mix of home issue. this is something we've been reporting on cnbc. it is a lack of supply in the disstressed category where we have seen so much of the action over the past year. sales of homes are down 6% in april. sales of homes between 250 and 500 k are up 21%. in april, again, the realtors saying this is an acute shortage of inventory. there is a lack of supply on the low end. that has skewed the price numbers up 10% year over year.
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2.5 million units representing a 6.6 month supply. i know that price number is going to be a big headline, but let's be really careful with it. >> well explained. i want to get to the road map for the next hour. republicans and democrats in the senate coming together to roll out start up act 2.0 in a job creation. we're going to sort through the economic. and start up america partnership cofounder steve case. >> and we found best buy, the bottom line in the first quarter, comparable store sales coming in rather light. we'll break it all down in just a few minutes. >> it's facebook fall out day 3. we're going to sort through the red flags from the retail invester to the underwriters. >> google sealing the deal, officially completing its $12.5 billion purchase of motorolla
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mobility. >> ratings agency fitch downgrading to a plus with a negative outlook. japan's gross government debt is estimated to hit 239% of its economy by the end of 2012. clocking in as the highest of any fitch-rated country. >> and we couldn't go too long without mentioning facebook. an analyst with the lead underwriter from facebook from the social networking just days before the big public debut. the change in morgan stanley's estimates came in with the heels of the sec. we should note jp morgan and goldman revise their estimates, as well. we should know, too, that this was according to reuters. there's no official initiation of coverage, obviously, by underwriters. this could be a catch up based
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on the amendment. >> yeah. yeah. and it doesn't raise that large of a red flag they're not able to come out as underwriters. but it was being communicated by other analysts, prior to the ipo. >> and so the december par tis between facebook's performance and tech overall snapping a 12-day sluzing streak. that really underscores the poor performance. some of the managers around 31.50. they are in danger of going under.
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>> yes, their lock ups are at 180 days. many of them -- we talked a lot about the stocks swamping the market. but it is important to point out that if this stock stays at this level, you may not be inclined to sell if you're an insider. so at least that overhang may not be there if, in fact, the stock doesn't really do particularly well. i think the immediate holders are still with the options strading on facebook. right now, we're seeing it move down just on selling alone. kala is at nasdaq and she has what is the latest. >> well, david, i wish i had a little bit more details for you.
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those proxy materials that they were handing out were printed on april 12th. they made no mention of facebook. but we expected that q&a was going to be a large portion and we expected that facebook was a lashlg part of that q and a. if you were listening to the web cast, they were tightly, tightly securing the upstairs where the meeting is going on. we couldn't get up there to actually listen and the web cast was kaulgt off. we expected it going on because we haven't seen people leaving. but as far as the content of what's being discussed there, we have no idea what nasdaq is telling its shareholders about what went wrong at facebook and what its liabilities will be and how it plans to handle the situation from here.
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but analysts and commentators everywhere expecting that that could be more tom joyce saying he expected those liabilities to be around a hundred million. so you've got a lot of runway there. it's anyone's guess right now, david. >> kayla, i'm just curious, when you say cut off, was it cut off intentionally? in other words, does it seem like nasdaq is trying to control the mes sablg here? the entire early remarks were broadcast by a web cast. a lot of people i know were listening and we were hanging on those details waiting to get those questions about facebook. analysts are invite today this meeting. so i think it might have just been media that was blocked out of this call. but there's no doubt even though
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the meeting has to do with 2011 performance. >> if you're a shareholder, can they distinguish that you were a shareholder as opposed to the member of the media? >> all right, let's check in on jp morgan shares surgie ining b about 4.25% today. skbl well, those regulators have taken their seats over at the senate banking committee already. they're expected to face questions from the senators about what happened at jp morgan and also, possibly, what happened with the facebook ipo on friday. i had a chaps to catch up and he said that the jp morgan trade is really a reminder about what happened back in 2008. he said it has reaffirmed his determination to proceed with
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implementing dodd-frank. they have not finished implementing dodd-frank. but he says this is a reminder for everybody in washington that they ought to be fulfilling their investigations with dodd-frank. >> all right, eamon, thanks so much. >> this morning, republicans and democrats in the senate coming together to introduce start up act 2.0 in legislative package and jump starting the creation and growth in new business. one of the bill's cosponsors joins us this morning along with steve case, cofounder and former ceo of america online. gentlem gentlemen, good morning to both of you. >> good morning. >> good mourning, carl. >> senator, you ooir right. we want to prove the critics wrong. congress can get something done in an election year when we work together to strengthen the economy and create jobs. what gives you comforts, this is going to stand a chance on the
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hill. >> well, several things. certainly, the senators who are involved in this act, were relatively new members of the senate. we didn't get the memo that says you could only work in nonelection years. and i think that our success, we've seen some evidence of that with the passage of the jobs bill. something that we supported and it was enacted, signed by the president, dealing with cap fall formation. but i would say the reason that this can get done is because the country desperately still needs to focus on jobs. we need to remain a competitive country in a global economy and we don't have the luxury of postponing these kinds of efforts to grow our economy, help put people to work, strengthen the opportunity for our country to grow economically and to have economic security. we simply don't have the time to say let's wait until after the election. and then it's the lame duck. in the lame duck, most things are going to get bypassed and wait for the new congress. there's just no option.
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>> steve, interesting components to this. entrepreneurs, visa, keep people in this country making permanent the exemption of some capital gains taxes, moving money from university research facilities to the private sector. >> the most important is winning the global talent. and we kick them out of country and force them back to start companies there that compete companies here. the other thing is around incentive. but there already is some good bipartisan support even in an election year. >> but the job is not done and the start up 2.0 that two
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republicans and two democrats are coming together to do. it's critically important. >> it accounts for all the net job creation. it's going with economic growth. a fight to focus with entrepreneurship. people thought of doing that even in an election year with the support and the bipartisan effort. >> steve, i do want to ask you about facebook. we couldn't go too long in this conversation without having the founder of aol come into our facebook. a lot of people are making the comparison with the hype of facebook and similar to the hype around aol time warner. you said this is a historic
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moment in which truly come of age. i'm curious what your take is on how the stock was traded and how the underwriters in the exchanges have done in listing this new issue. >> it's to make sure the next generation of facebooks and googles and ja hoos and many other companies start in this country and grow in this country. we became the leading economy in the world because we're the most entrepreneurial country in the world. we need to get back to that and not focus on the day-to-day thick. it's all about entrepreneurship. >> senator, coming back to the bill itself and to your effort here, you know, mr. case mentioned immigration being so important. we hear it all of the time.
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but it's also been a lightning rod, both for your party and the democrats. what gives you the confidence that you can, in anyway, even a modest reform of this type, get something through the house and the senate. >> i've heard the stories from particularly high tick companies who are currently hiring with phds and computer education. but they're hiring them in their research facilities in canada or dublin. and the point i want to make is, it's not only that we lose those jobs, we lose the entrepreneurial skills and talents of those working someplace else who are going to start the next facebook or aol. those things are very important. this is about jobs today and about jobs for americans in the future. the reason we can do this is this. as the provisions in this legislation in regard to the visa.
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and we need to get rid of this explanation that we can't do anything about immigration unless we do everything about immigration. >> appreciate your time, guys, talk to you soon. >> thank you. >> thank you very hutch. >> well, best buy beating on both the top and bottom line. so is there a comeback? we've got your big box trade next.
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we are watching shares of best buy down by about a half percent. but, still, close to three-year lows. the big box retailer reporting better than expected earnings. same-store sales were still down 5%. let's bring in peter keith. he's a senior retail analyst on best buy stock. senior equity research analyst recently downgraded to a hold from a buy. guys, great to have you with us. this seems like a stock that's in purgatory. it's cfo for international is gone. its cfo is leaving on friday. it's lacking a number of management position. we don't know where the stock or company is at this point. there is a sales week shift and
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a low tax shift. for us, it was more of a shift. i will give highlight frs the conference call that he plans to initiate. we don't know if he's the permanent long term. >> anthony, what would it take for you to get constructive? does it need to be a permanent management team? >> absolutely. we need to know who the ceo is going to be and what he or she's turn around is going to be. we're not as barish on best buy as a lot of people out there. we think it's, quite frankly, ridiculous. this is a company that did $50 billion in sales last year. so they have the financial wherewithal for the strategy. it's determining who that is going to be and what the strategy is.
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can you see a best buy that is severely paired down so that it's much, much smaller? that there won't be a true transformation of the company here? >> well, i think that that's what the interim ceo eluded to is the fact that they will be smaller in terms of their retail store base, particularly their big box stores. that's where the consumer wants to shop. at the end of the day, we're not saying 50 billion or 20 billion, it might be 50 billion going to 45 billion. i think at the end of the day, there's -- we'll tell you it's circuit city and we just don't think that's the case. >> when does entertainment stop being the ugliest of the ugly in terms of categories? >> well, you know, the consumer
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electronics industry, overall, looks really bad. there's a lot of companies doing quite well. this domestic online channel up 20%. at what point -- is 20% decent? better than kpped? is that number going to get better? >> anthony, why would the company keep a buy back in place at this point? it's a fairly sizable one. are they in a position to do that?
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we estimate they'll probably generate another billion and half in free cash flow. that's one of the reasons that we think this company still has plenty of time on their side. they are still generating plenty of free cash flow. >> thanks, guys, for your time. appreciate it. it raises time. >> it's funny. bob, the head of nasdaq listings, he was saying that he wanted us to play that tape over and over again. >> not anymore. >> not anymore. >> there's mark, the man who runs the nasdaq who was omni present in that opening bell ringing. we're going to talk about red flags next, analysts to those sideline retail investors, we're back.
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facebook getting the attention, but it has been a tough month for many people. in that mind, here's brian sullivan with a look at the may hit list. >> that's exactly right, brian.
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morgan stanley taking its share of the toll and its lumps this month. here you go with what we are calling our wall of worst month ever. and we begin with jp morgan ceo jamie dimon. shares have been down about 19% and he's among the most out spoken critics of regulation. so a little egg on his face. so moving on now to somebody you've been talking about a lot this morning, nasdaq ceo bob greifeld. he is humbly embarrassed. also, it could be on the hook for millions, if not more, worth of customer disputes. next up, chesapeake energy ceo, his personal borrowing and dealings coming under scrutiny. investigators for the irs and sec reviewing the company's
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operations. next up, scott thompson, the em battled former yahoo ceo. call it what you want, departure trigled by the college degree and computer science that he never actually received. he stepped down from ceo after just four months. he stepped down from two other board positions. you've got to include, certainly, scott thompson on that list. a late add to our list, guys. ron johnson. the fairly new ceo of jc penny. they posted a $163 million lost. his idea to maybe simplify kriesing not yet clicking with consumers. they discontinued their quarterly dividend. so we have to throw ron johnson on this list.
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and last, but certainly not least, everybody, is everybody. you. the individual investor, right? all of this stuff along with greece and everything else, taking a toll on the market. the dow is down 5% this month. we've got questions now about trading itself those are the nomineeses for worst may ever, but we want to know what you think. we've got to rock the boat. go to cnbc.com. a very fine program at 2:00 p.m. eastern called street side. >> brian sullivan, as we go to break, take a quick look at shares. about 17% down from friday's action. still to come as the wireless industry expands. how will it look while still maximizing investigation?
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welcome to the world leader in derivatives. welcome to superderivatives. and snnow, some of the stors
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we're squawking about. at one point this morning, the stock was trading below 31. that is $7 below the company's ipo price. a lot more on facebook in just a moment. the dow at its highest level in three and a half years. expectations up 3.4% in april. >> let's take a look at the markets and their internals. the second best day at 420.12. the dow is up by 55 points. the nasdaq composites, again, the day after the best day of the year, the nasdaq is higher by about 15.5 points. let's take a look at the internals here on the markets. check on the advance decline on the nyse. advancer leading declines by almost a 4 to 1 margin. let's take a check there and see about a two to one ratio. >> and a little more than one
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hour sbroo trade iinto trading. >> david, we are looking at gold prices right now that have basically turned to the flat line. we have paired losses in the golden market as gold seems to be following the euro. hsb's jim steel says that this week's u.s. economic data, we've had the existing home sales data, we're going to get new home sales, durable goods, consumer confidence, all of that could indicate whether or not the market proceeds there will or will not be further monetary easing. we're toward the 16.10 level. we came close to 1600. we'll see if we get above 1610 toward the 1625 level.
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the group has just announced that they launched a new online trading platform with otc products being traded side by side. this is the first time they've done this. this is the first time and should be interesting. melissa, over to you. >> all right, thank you very much, sharon. let's send it over to brian for our market flash. >> watching shares this morning of cree, c-r-e-e, off the lows. still down 6%. they hit a low of 2530. their ceo leaving the company for the same job at a company called extreme networks. that is a company that sort of competes with cisco space, a network infrastructure. the news is credit in terms of the swiss analyst was kind of right. >> all right, thanks very much, brian.
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yesterday was the first full day of trading for facebook. shares closed down 11%. the fiasco caused by its initial public offering, well, it has nasdaq nervous. facing shareholders today at that company's annual meeting. i'd love to get your take on greifeld and his tenure. as also the failed bit for the nyse, how do you rate his tenure? >> i would ralt it highly. whether he came to nasdaq in the early part of the last decade, nasdaq was in a shambles and a loss making. today, it's a well rounded, large, very profitable company that is a leading market player and equity in derivatives. >> you know, you mentioned large, of course.
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it wanted to get a lot larger. and the next against all exchanges is they need to get larger and may not be able to. do you agree? >> there's a lot of bigger fish in the sea right now. >> what's your take on what happened on friday between the $13 million being set aside for potential liabilities to today cutting off access to the media. >> i'm not commenting on that specifically. but i think that nasdaq had an embarrassing moment. i think they handled that well in the aftermath and worked on what unfolded and what the customer faced. i think they'll benefit from a
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pretty drastic approach. in the meantime, how much do they need? to what degree do you think they're going to win or lose on either side of these cases? well, that cap is $3 million. they are also asking to use about $10 million in gains that they receive from broken trades towards customer resolution issues. that's how we get to the $13 million issue. so that should be something that meaningfully helps. >> appreciate your time. >> as you mentioned, shares of facebook still under pressure. although, off the lows of the
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session, its all-time lows, in fact. our next guest is a portfolio manager at the firsthand technology which holds 600 thousand shares of facebook. he joined us on friday. >> six months or a year from now, this will trade like a big cap tech stock. like a blue chip. and between now and then, we'll have moments like this where people are trying to head fake each other in everybody else's anticipation and all sorts of silliness like that. it will take a few quarters before the stock really becomes less about emotion and more about the story and how the story is unfolding. >> it's just two full trading sessions. but walk me through. you came on squawk on the street earlier as well, and you said
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one reason why you think it will trade a blue chip technology fund is it will have a significant weighting in the nasdaq. why do you think that will happen sooner than most people think? >> well, i'm not sure what most people think. it was right around the time that nas daz was getting ready to go public. we believe this sa blue chip company right now. it's sort of growing into its clothes. right now, it seems like one of those must-sell stocks. that's the current mood of the market. if you follow the company's fundsmentals, this has got a lot of potential and it's growing into it.
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the nasdaq had its best day in 2012. and the s&p technology index snapped a 12 session losing streak. that has got to be a little bit frustrating. >> that's right. that's right. and i really can't advise you as to what kind of trade facebook is going to be this week. we're locked in here for the rest of the year in any case. we're not worried about things we can control. >> kevin, you're not afraid -- you don't shy away from questions about worst case
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scenarios? i know you're focused on the long term, but for those who are not, for those who are focused on the short term, what is the worst case scenario in the next three months? >> you know, that's a hard one to envision. i mean, i've seen a lot of companies have their moment in the spotlight and i've seen the detractors coming out of the woodwork. this company has had the crisis where the big boys come after them. i have a hard time when people don't want to socialize anymore. i mean, the worst thing that can happen is it can seem like it's taking them forever to figure out how to monotize it. and their first couple of efforts to go from desktop to mobile might seem a little bit
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ineffective. but safe to say you're not counting on the first reported quarter, right? this is a multiquarter phenomenon? >> fair enough, yes. but i think you're right to sort of bring the intellectual fo kus back to what brings this stock up again. it's something that brings the people back to the fundamental story and why they got excited in the first place. that's everything to do with facebook, the franchise. and what it already is and what it's becoming. >> at this point, we're talking about investing companies pretty much preipo.
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however, in our open end fund we haven't dropped a buy ticket yet, but i think we'll be adding it in there. it may only be 10 or 20,000 shares, but we'll be adding it in the next 23u weeks. >> all right, kevin landis, firsthand. >> still to come this morning, the sec looking to find easier ways to support industry. we're going to sit down with the chairman of the fcc in just a moment.
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welcome back to "squawk on the street." take a look at shares of hp up more than 5.5% today. they had an upgrade to have a third upgrade for this company just in play alone. i do want to keep in mind it's down 18% year to date. of course, as oil drilling exploration company. of course, carl, it's the ticker i always get when i forget to put my q in hpq. back to you. >> yes. often confused. the economy mielgt still be in recovery, but if there's one thing we learned today is that consumers, including melissa, still love their shoes. the company's president and is ceo, michael, good to have you on the program. >> heck of a top.
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you got the hike, the guidance up. looking for concerns here. what concerns you? >> gee, carl, i don't have big concerns right now. is really done a fantastic job of injecting a lot of newness and freshness into the footwear assortment, and we're taking advantage of that. a lot of retailers simply don't have the square footage to be able to showcase that broad assortment, and dsw, thankfully, is not space constrained. so we can offer 30,000 pair and 2,500 style/color choices to our customers. it's a great thing. >> if analysts have to point to something, it's usually about higher product expenses, gross margin has nowhere to go but down. how do you respond to some of those worries? >> you know, in q-1, carl, we
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matched our merchandise margin performance of a year ago and that was a record high. we seem to be able to offset some of the product cost increases by working more closely with our vendor partners. so that's going pretty well so far, but we've got to keep at it. in terms of preopening costs, you're right, we are going to be faced with more preopening costs in q-2 and q-3 because we're going to be opening 25 to 30 more stores yet this year on top of the ten we've already opened this year in the first quarter. but, you know, after q-3, i think it's going to really pay big dividends to us in q-4 and into 2013. >> michael, as carl had so aptly observed, i am a big fan of shoes in general, but the dsw format is kind of big and a little bit daunting and some may make the comparison you're like a best buy and that people can go in there, see what they like, and order what they want on site like a zappos where there's free
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shipping to and from. there's shipping to you and free shipping on returns. how do you compete against the onliners who don't have the overhead costs you have associated with a big retail footprint? >> that's a great question. you know, we have a very meaningful dot-com e-commerce channel our customers seem to like and, in fact, we market to our customers and encourage them to be multichannel in their shopping. so a lot of our customers like to buy in store and -- or buy on dot-com and return in store or vice versa. so we know that our multichannel shoppers are about twice as productive as our single channel shoppers, so we're trying to encourage that purchase beha behavior. and as i said before, it's interesting. you say it's a daunting experience and some of our customers have said that. what we've done in response to that is to try and organize our product the way people shop for
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shoes. so we put all of our evening shoes together, our dress shoes together, our casual shoes, our athletic, our sandals. so that makes it easier for the customer to shop and i think she appreciates it. we also actually put up street signs so they know where they are in the store. we think the organization of the product really makes it a much easier shopping experience and when you combine that with our everyday discount pricing policy and the fan ttastic service we offer our customers, it's a pretty powerful combination. >> you can't see it but melissa is smiling just listening to you talk about shoes, michael. thanks for your time. we'll see you in the coming quarters. >> okay, thanks. >> michael mcdonald. you can't even wipe the smile off your face. >> looking at all the different mandals you can find in one aisle. >> what is a manda sfl. >> a man sandal. oh, come on. you knew that. you're the brain. >> i did not.
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>> what's a mandal, oh, i have no idea. >> i wouldn't have answer that had question on" jeopardy!" >> still to come, let's check in with rick santelli and what he is working on. rick? >> reporter: and it is going to be a big hour, melissa lee. you know, go it alone or go it long. you know, many of us from past generations always thought about the country more as go alone and everybody follows meaning international. things have changed. a sense of urgency. is that what celebrates capitalism from government? and the last topic, fitch down grades today. how can that impact your investments? we'll talk about that all top of the hour. so uh this is my friend frank and his, uh, retirement plan.
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a little something to do with the facebook fallout, asking if your nasdaq what is your pitch to the next big ipo to get them to list with you tweet us your answers or handle.
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for a hot dog cart. my mother said, "well, maybe we ought to buy this hot dog cart and set it up someplace." so my parents went to bank of america. they met with the branch manager and they said, "look, we've got this little hot dog cart, and it's on a really good corner. let's see if we can buy the property." and the branch manager said, "all right, i will take a chance with the two of you." and we've been loyal to bank of america for the last 71 years. my name is robin...
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i'm a wife, i'm a mom... and chantix worked for me. it's a medication i could take and still smoke, while it built up in my system. [ male announcer ] along with support, chantix is proven to help people quit smoking. it reduces the urge to smoke. some people had changes in behavior, thinking or mood, hostility, agitation, depressed mood and suicidal thoughts or actions while taking or after stopping chantix. if you notice any of these, stop taking chantix and call your doctor right away. tell your doctor about any history of depression or other mental health problems, which could get worse while taking chantix. don't take chantix if you've had a serious allergic or skin reaction to it. if you develop these, stop taking chantix and see your doctor right away as some can be life-threatening. if you have a history of heart or blood vessel problems, tell your doctor if you have new or worse symptoms. get medical help right away if you have symptoms of a heart attack. use caution when driving or operating machinery. common side effects include nausea, trouble sleeping and unusual dreams. my inspiration for quitting were my sons. they were my little cheering squad. [ laughs ] [ male announcer ] ask your doctor if chantix is right for you.
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hey, it's sandra -- from accounting. peter. i can see that you're busy... but you were gonna help us crunch the numbers for accounts receivable today. i mean i know that this is important. well, both are important. let's be clear. they are but this is important too. [ man ] the receivables. [ male announcer ] michelin knows it's better for xerox to help manage their finance processing. so they can focus on keeping the world moving. with xerox, you're ready for real business. time for "squawk on the tweet." we're asking you this morning if you're nasdaq, what's your pitch to the next big ipo like
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twitter, for example, to get it to list with you? ivan writes, list with nasdaq. it's way cooler than broad street and the food is better, too. if you list with us, we'll give you some free facebook stock. i think that's all we have time for. what's coming up tonight? >> goldman sachs will tell us how big the problem will be. but tomorrow is the first day you can short facebook shares. a strategy on how to trade it tomorrow. >> thanks, guys. david, see you later. we'll talk to j crew as the week goes on as well. in the meantime, here is what you might have missed earlier this morning. welcome to hour three of "squawk on the street. "here is what's happening so far. >> the senate hasn't passed a budget in three years. it doesn't take 60 votes. it only takes 51. three years without a budget. i would think maybe they should do their own job first and then start talking about how other people are doing theirs. >> the way the ipo system works
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in its traditional accepts, it's an insider's game. the underwriter has the right to allocate it to his clients. it's not open to the broad public. they call it an initial public offering but it's not at all. >> germany is ben fitting from the chaos. why should they change? everything that could be wrong beginning with the moment the gm said we don't want to be in has happened here and if you liked it, even if you liked it, you can't like it anymore. and if you didn't like it, then you really have to start thinking, wow, is there a price i can pay. >> the s&p 500 at the top of your screen. opening on the big board. >> isn't is necessarily a mobile monitorization problem, it's just that there's very few companies who do it, have the technology and are good at it. >> we are the most entrepreneurial economy in the world. we need to get back to that, not
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f focus so much on the day-to-day thing. it's not a snapshot. it's a movie and it's all about entrepreneurship where we're going to keep america great. good tuesday morning. welcome to the third hour of "squawk on the street." a check on the markets. the dow up 64. the dow and the s&p have not put two consecutive up days together since april 26 and 27. the dow was up 135 yesterday. got some gains on the nasdaq as well up almost 19 at 2865. urban outfitters and ralph lauren, both retailers, both beat quarterly expectations. ralph lauren also doubled its quarterly dividend although we are seeing lauren at least at the lows of the session. big tech weighing down the dow as both hp and intel trade in the red. a road map for this tuesday, the facebook fallout, hitting the street. the stock down sharply close to its highs for the session. facebook may not be the riskiest stock out there. we'll see why amazon might be even more overvalued. plus, nasa going private.
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the "space x rocket dragon" kicking off a new era of private sector space travel. we'll go live to space x hq and get more on the launch. with one retail investor still not sure at this point what's going on with his shares of the social network. and a one-on-one with the chairman of the fcc, to talk regulation and the latest developments in the mobile world all coming up in the next hour. first, though, we'll start at the nasdaq, the exchange holding its annual shareholder meeting days after the facebook trading glitch debacle. kayla tauscher is live with the latest on that and, kayla, on the future for bob greifeld of that company. >> reporter: well, carl, the executive compensation was voted in today's meeting which surprisingly lasted only 23 minutes. we talked to some analysts on the call and they, too, didn't hear any q&a so we haven't seen
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a transcript but it appears there were no questions broadcast. you look at shares down just slightly and the only mention of facebook we heard on the webcast we were listening to, that in a positive light, that it still remains a value proposition, that it's stronger than ever as far as listing on the nasdaq talking about western digital switching over just yesterday, a $9 billion market cap company, and that the value proposition was strong and that's the only mention of what happened with facebook on friday throughout the entire meeting today, this morning, carl, even though that meeting was extremely short and shorter than expected since people familiar with the meeting were expecting a large q&a session and one that included a lot of questions about-face book. >> yeah, even despite the aggressiveness of the mea culpa on sunday, are not so much transparency today. kayla, thank you. some thoughts about the future of that firm, that exchange? >> yeah, i can't see how greifeld will survive this call. >> really?
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>> yes. remember, the member firms, many of the member firms are still having a difficult time trying to even just reconcile their own books. it will not -- maybe it will take a couple of weeks but when all is said and done my guess is greifeld goes on to -- what is that phrase? spend more time with the family. he'll spend more time with his family in a couple -- let's give it a couple months after this settles here. remember, this is a -- as i said to you at the end of the program yesterday, the last 24 hours i continue to hear that all roads lead to the nasdaq in terms of there were a lot of mistakes made here but ultimately the lack of information that the nasdaq provided for a period of time, not just in terms of reports but as well as people seeing quotes, the member firms are going to make someone have to pay for this. >> the nasdaq chairman at this meeting -- >> correct. >> -- says the operator is far stronger and better with greifeld at the helm. you don't think his future got more secure this morning, not
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worse? >> have we seen situations in the past where boards have come and supported people only to find out that some of their larger shareholders don't necessarily agree? so, no. by the way, the $13 million they said they put in reserves, i e-mailed you early this morning. just based on the trades i know have been dk'd in the last two days of full trading, that $13 million is a minimal percentage of the dks. we don't know where they'll ultimately settle out but those trades aren't going to be paid for and that money will have to come up somewhere. so $13 million is -- i was about to say something on tv, $13 million not the right number, folks. >> okay. do you want to bring in eamon? >> is eamon there? eamon is down in d.c. and i think you had an opportunity to talk to the s.e.c. in terms of what they are looking at and their investigation into what's happening here with the trading
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on friday. bring us up to date. >> reporter: yeah, that's right, gary. i'm standing outside the banking committee hearing on capitol hill this morning where the s.e.c. and the cftc are testifying before senators. you called me with an interesting question, this question of whether or not there should have been a halt in trading on facebook on friday based on the rules of the nasdaq. i asked the s.e.c. whether they were investigating that. the folks are right here just down the hall from me now and they said basically nothing in response to my question. they said we continue to review the facebook matter with nasdaq and have drawn no conclusions as yet. i asked whether they are specifically looking at this question whether there should have been a halt in trading in facebook at some point on friday and they would decline to comment on that specific question, gary. so no real answers here from the s.e.c., folks, even though they're just a few feet away from us, where we're standing right here. >> when you get a response like that from one of the regulatory agencies, the fact that they are saying we're looking into all
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these matters as opposed to there's no question that -- in other words, they're leaving the possibility that a halt should have been instituted on friday given that answer that they gave you, is that correct? >> reporter: yeah. logically that would be the case. i wouldn't necessarily leap to that conclusion based on this response. and this is why. in washington when you get one of these scandals, a moving target that's moving very quickly, you see them hunkering down, not answering any questions, trying to figure it out for themselves first before they go out in public and make allegations and respond with very specific facts. if they don't know the facts, they're going to say we're looking at it and we don't have anything for you. that's sort of what we're getting right now. i wouldn't necessarily go the next link down the chain here just yet, but, for right now, they're giving us the old-fashioned washington no comment. >> as always, great stuff. carl, i know a lot of viewers, those in the business, that at least they are looking into it.
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their whole point, have they halted trading around 11:45, a lot of what we saw yesterday and early this morning probably would not have happened. >> finally, what are you hearing about demand for the name as it gets closer to $33 now but $32 and lower early this morning. >> i think -- you know, if you remember back in february we had a firm analyst insight do some relative values for us and at the time we asked them to run the facebook numbers and they ran the numbers, just the numbers, and they compared it to apple and google. we came up with price targets where apple and google would have been trading based on the facebook value. here is the problem. i know we have to run here. we have these numbers, if you remember. it was something like apple at $12.50 a share. google at $8.50 a share. it's very simple. on a relative valuation basis if you're looking at at the large cap it tech names, facebook is still overvalued if our playing that game. devalue hunters are not going to go there because, again, those are the numbers. you had apple and google and we
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told you that in february and i don't think a lot has changed since. >> obviously that's a longer term story. rick santelli with the tuesday edition. >> reporter: with the threat of regulation after listening to what was just talked about with gary with regard to the s.e.c. and questions regarding facebook, should they have stopped trading, you know, go along or go alone. this is a big deal. you know, whether it's basel, whether it's the health care rule, other countries have national health care, there used to be a time -- i don't know and older than you are, where being a bit of a nonconformist took a national kind of importance. i think the u.s. was a leader in many ways. we did well. we helped the chinese, i think, get up to speed. we helped a lot of countries. we have nato here over the weekend in chicago. i tried to avoid it but there
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are positives in the world working together. when it comes to regulation, how many times have you heard, listen, we need to allow certain products because, if we don't, they'll go offshore. so what. if it's not regulated properly, then these products aren't any good. let them go offshore. let them go off planet. let them go off solar system. why do we think that way? makes very little sense to me. and considering to keep that threat and sense of urgency, you know, how long has it been. you heard eamon, whether it's questions about otc products, which i continue to bring up, how dare politicians have a narrative that what happened with jpmorgan, no matter what happened, who is to blame, to walk away from that thinking, oh, it's a better call to arms for regulation? once again, two years ago otc products, or four years ago or five years ago with regard to the credit crisis, there's no sense of urgency. think of a government agency that went to vegas and had all those negative headlines.
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part of what their responsibility is is to take care of all these vacant buildin buildings. where is the sense of urgency? viewers, if you own a vacant building, do you think you could sit on it for a decade and not worry about it? there's no sense of urgency. that is what separates government from anything profitable. and finally we'll talk to ira harris at the bottom of the hour, fitch downgrading japan shows a lack of a sense of urgency. why? their consolidation plan for fiscal responsibility is just not going to work. they're going to have to use the printing presses and fitch, moody's and s&p understand that. carl, back to you. >> yeah, and having their worst day in a very, very long time. thanks a lot, rick santelli. they're the big four in the dot-com and tech world. you may be surprised about which one is actually the most overvalued. we're going to talk about that after the break.
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welcome back to "squawk on the street." remember those days when the stronger dollar meant a weaker stock market? not the case today. the dollar is stronger guest most of the major currencies. i want to point out the japanese yen against the dollar, the weak est day since april 3. the down grade, of course, the scary debt to gdp ratio moving forward, carl, the yen taking it on the proverbial chin. back to you. >> thanks to fitch. thanks a lot, brian. one of the biggest question marks facebook is facing, experiencing rapid growth via smartphone and tablet users.
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however, apps, including games, cannot be accessed on facebook's mobile site. i want to bring in dennis berman, the marketplace he hedi and columnist. always good to talk to you. welcome back. >> good to see you, carl. >> interesting that they decided not to create a so it fist kated mobile platform. but it's by choice. why are they in this hole? >> they're not there yet. keep in mind they just took in billions of dollars in capital. you can bet your bottom dollar they're going to be trying to develop a much more robust platform than they have now. as is constituted, carl, you can't do the great things you like to do on facebook on the mobile site. you can do a few things, check on status updates, but playing games in particular is one thing you cannot do and that's a real downside right now for the facebook mobile platform. >> yeah. the story today in "the journal" really interesting insight. their thinking was twofold, right? on the one hand you don't want to be beholden to apple or google. >> that's correct.
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>> and you want to create something that is uniform so you don't have to change the game depending on the carrier, right? >> making these choices, these technical choices, perhaps it will pay off for them in the long run. in the short term, they're quite behind. apple has developed such a po r powerful ecosystem. android is developing a powerful ecosystem. whether facebook can develop a third ecosystem around that, you know, we will see over time but, right now, they are behind. and that, i think, is affecting the valuation. we saw the stock move this morning. it's come back a little bit since then. people are wondering, people are spending their time on mobile and is facebook going to be there or not? >> so you're always good to ask this question having once covered like no one else, can they do this internally or do they have to go shopping? >> they have more money than they need. i'd say they can do both right now. look for them to buy a bunch of developers, look for them to buy the best talent internally to develop a more robust mobile platform. i don't think it's a matter of
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them not being able to do it. i think it's a matter of time and making those strategic decisions, carl. >> we just talked about the four horsemen of new tech -- >> there are four of them. they're big. >> yes. and various valuations. do you have an opinion as to which one is overvalued? >> this is the most interesting thing. my wonderful colleague, marcella prince, put together a chart that you can see on today's "wall street journal," looked at basic financials of those four horsemen, apple, google, facebook and amazon. >> there it is. >> what struck me was this, carl, that of the group actually the best performer has to be apple. okay? look, on a forward basis, right now based on current trading price, it's trading in at 11 1/2 times of 2012 earnings. that is not very high. compare that to amazon, right, trading above 150, almost 160 times above its 2012 earnings. if anything comes from the chart, carl, you have to say amazon is overvalued compared to
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facebook. if i had to rank them, apple/google. facebook and amazon last. >> dennis, i don't know if you saw the relative numbers we presented right before but the reason amazon will maintain that premium value on a relative basis is because their shareholders have bought into this idea that they're not trying to generate the type of profits that they could right now because their shareholder base wants them to invest in the business. it's a very different apples to apples comparison to use a bad cliche there. >> i'd say that's a fair point but you do understand if you just look at the basic numbers, you do understand the operating leverage inside facebook. if they make a few tweaks right and, carl, let's say they get a mobile strategy right, they can make a few switches back at headquarters and really develop some serious operating leverage. it takes just $5.2 billion estimated revenues in 2012 to generate $2.6 billion whereas it takes amazon nearly 12 times
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that to generate the same amount. so it's just the difference between shipping actual, physical product, and making the switch in software. so that's the case for facebook. get a few things right, switch it on, and you have some great leverage. >> it's not work iing today but maybe longer term. >> if you like the bull story, there's plenty of stock to buy. plenty of stock out there if you like it. >> dennis, thanks a lot. when we come back, an inside look at the first private sector trip into space. and then we'll count you down to the european close about eight minutes and change as we listen to a little elton john. tdd# 1-800-345-2550 the spx is on my radar. tdd# 1-800-345-2550 we're hitting new highs. tdd# 1-800-345-2550 and i'm on top of it all with charles schwab. tdd# 1-800-345-2550 tdd# 1-800-345-2550 i use streetsmart edge and its tools like... tdd# 1-800-345-2550 screener plus - i can custom build my own screens tdd# 1-800-345-2550 or use predefined ones. tdd# 1-800-345-2550 and i can trade wherever i want, tdd# 1-800-345-2550 whenever i want. tdd# 1-800-345-2550 the kicker? tdd# 1-800-345-2550 i pay $8.95 a trade. tdd# 1-800-345-2550 that's a deal in any language.
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what are you waiting for? this is big news. for the first time a private company has launched a vessel into space for nasa to connect. space x falcon 9 launched "dragon." our jane wells is outside space x headquarters with are more. quite a story, jane. >> reporter: it is, carl.
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you know, for the first time mission control is not in houston. it is here in the private hands in this building behind me on hawthorne where shortly, there was a moment this morning after some delays and glitches over the past few weeks, a moment came when the founder said it was his company's version of winning the super bowl. >> and launch of the space x "falcon 9" rocket. >> reporter: space x's "falcon 9" with its dragon capsule carried food and supplies to to the space station in a test of its abilities. it's carrying the ashes of more than 300 people including gordon cooper. they have a contract with a company that arranges for human remains to be flown into space. the victory celebrated here in hawthorne at mission control is where elan muss being hk has be. the transfer from public to private is like the history of
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the internet. >> the internet was created as a government but then the introduction of commercial companies really accelerated the internet and made it accessible to the mainstream. i think -- i think we're actually at that stage where success of this mission, even what we've seen thus far bodes well for that new space exploration. >> reporter: the dragon capsule will have to go through some tests before it's allowed to dock with the space station. they hope that will happen friday and then the reusable capsule will return to earth the following thursday. this whole program so far has cost about a billion dollars. so where did spacex get its money? the largest amount came from nasa, meaning you, $390 million. other customers provided about $300 million. elon musk has used about $100 million of his own. of which this test trip is not
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one, spacex has contracts for asia, broadcast satellite, asia sat, satmex, taiwan, argentina and others. it's a big deal. if there is a problem for the first time the astronauts won't say, houston, we have a problem. they'll say, hawthorne, we have a problem. >> jane wells in los angeles. jane, thanks a lot. we will get the european close in a moment. [ male announcer ] we imagined a vehicle
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the european close today in about 15 seconds. a lot going on. the oecd saying there needs to be eurozone bonds. the imf says the bank of england needs to step it up. kelly, we count you down to the close. morning or good afternoon. >> reporter: the european markets are closing now. >> reporter: carl, you should say good afternoon. it's actually been a good day in the markets over here. we've seen everything from the dax to ibex in spain, the weakest performers, something in the range of 2%. last week closing down germany had almost given up its year to date gains and it was one of the stronger markets. it's gotten off to a better start helped from what you said to the report to the imf now talking about the need for growth. if nothing happens, there may be more on the table. if there's no concrete measures, will that be enough to keep this
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going? not so clear. you are seeing, again, firmer attitude. after hitting lows, spain and italy seeing theirs come back down. better handoff than we've had in the past but the two areas to focus on, carl, one, euro bonds. huge differences between what france, germany and spain have said about the issue. is there a bazooka out there? is it something angela merkel who looked isolated it at the g-8 meeting over the weekend is ready to support? >> yeah, and we still need to find out how aggressive they are going to be. interestingly, kelly, citi is out with a note saying if there is a greek exit could take the euro down to $1.01. i don't think i've seen a target quite that low. >> reporter: i think joe kernen would be happy to hear that since he's planning his vacation, it would help spur
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people traveling to the region. it also implies a nasty outcome. i just think it's important in all the conversations we've had over here to me have this inkred play clea the cost of a greek eurozone breakup are huge but it's precisely the can concerns about the costs that are giving more reason to move towards federalism, almost, to more fiscal integration. it's really only going to be if the people of europe decide that's something they don't want, it's going to keep these measures from being put in place, one reason we had a guest saying he's optimistic because he thinks this is giving people cover or rationale to take those additional sets and keep in mind if you want to talk flight to safety, you mentioned the euro, tomorrow germany will be auctioning off two-year debt with a zero coupon. zero. you think u.s. yields are low, that's the sense of what's going on over here. >> kelly, thank you very much. kelly evans joining us from london.
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bob pisani watching -- what's going on? we're up two days in a row. >> i thought we were in a permanent downward trajectory. that's not true. i want to pick up on kelly's themes because she hit on the right ones. there's a couple of things happening and the first one and i know people dislike the idea of technical arguments but we were due for a bounce yesterday and are getting another followthrough today. there's more to it than that. there are a lot of hopes that europe and asia will get aggressive on growth. you've seen the stories out there, the chinese are looking for more infrastructure projects. they'll do anything at this point. you're going to hear all sorts of proposals, some of them crazy. some of them not. to increase spending and a lot of divisions over how to do that. there's a lot of hopes for plans post-greek election that they're drawing up plans on how to help out greece if they can convince them to stay in the election. more hope. here is the problem. there's two problems with all of these rosy scenarios. number one, it's not clear whether all these worries are going to translate into really bold actions, number one, and
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even if they can get a consensus, there's a lot of political divisions going on. did you see what the austrian finance minister -- you want to see about the divisions came out this morning and said holland's arguments, the new head of france, were nonsense. she called it nonsense. his ideas were nonsense, she said, that this is the whole idea about growth, financing growth, using debt was, she says, quote, recipes from the day before yesterday. this is a smack right in the face and this is the kind of arguments that you are going to hear about. so that's a little bit of a concern. meantime, if you look at the dow, i just want to show that you we had a nice move up just after 10:00. this came out with the existing home sale numbers came out. they weren't spectacular but quietly and slowly they are improving and i think that kind of matters at this time. take a look at existing home sales the last four or five years. you don't want to make too much of this because there are enormous problems in the housing area. this is what i look for and i was the real estate reporter
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here. slowly but surely the numbers are going up. distressed home sales, i think 28% of the total, they were over 34% a year ago. we still have an after lvalanch them potentially still out there but the numbers are slowly coming down and that's a little bit of a help. if you take a look at the building stocks and the material stocks which were big market gainers in the last couple of months and in the last week or so have been on the down side, those are nice moves to the upside and the volume has been pretty good. slowly but surely. >> yeah. even despite what was said this week. >> they're going to be cautious and they should be. >> thanks, bob. let's hop over to rick santelli who is watching japan, fitch and the end, rick. >> reporter: absolutely. and i have ira harris here as our guest. thanks for showing up today, ira. when i was reading all of the comments by fitch, i guess the one that jumped out at me is they basically looked at the japanese plan to get their debt under control and they basically kind of laughed.
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i mean, they basically said, listen, they're a vibrant economy but never enough growth to dig out the metrics in terms of their gdp versus debt. do you believe the same thing? >> it's absolutely right. the market has known that and we've looked at it for 20 years already. a demographic time bomb, we've known that. but, you know what, the one thing they miss is the japanese investments all over the world, which is why their current account is always so strong because when they get nervous they bring home money and the vast amount of money they have invested around the world makes an impact on them. >> reporter: now even with low interest rates it still makes an impact. >> sure. absolutely. because don't forget japan is caught politically because 97% of japanese debt is owned by japanese domestics. >> reporter: let's stop you there. this is the one that always makes me crazy, ira. as you said, demographic time bomb. their population is aging so they should be cashing out these tupperware party bombs they've been accumulating but i don't see that showing up in any of the numbers. >> don't forget they've had
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deflation for the last 15 years for sure. so if you have deflation, the real rate of return, even this morning, 85 basis points. >> reporter: it's still pretty good. >> it's far better than the u.s. at least it's a real return. >> reporter: the ministry of finance is probably more powerful than the bank of japan. their central bank really has much less independence although our fed doesn't have a lot left either. so my question to you is, do i buy or sell the yen here knowing the canadians are doing everything right and the canadian dollar is getting socked right now. >> the yen has been really the enigma in the system because of the vast amount of money and when there's zero interest rate globally, you are not losing anything by being invested in japan and only japan. the problem is the japanese corporations are starting to be who will load out, moving jobs out because it's more the euro/yen cross that we've talked about for a long time.
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$101-$102 is a killer for the japanese auto markets. for audi -- >> reporter: it's the european situation. >> it's germany versus japan. so it's lexus versus honda. >> volkswagen versus honda. lexus versus mercedes. a huge impact on japanese luxury imports and -- or exports, i should say. >> reporter: we need to grab phil lebeau one day and take this to the next step. carl, back to you. >> rick and ira, thank you very much. retail investor who dared to get in on facebook's ipo on the first day of trading and now may be regretting it up next. first, the winners and losers from the trading day just ending in europe. ♪ ♪
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for many of those who were lucky to even get in on the action, they're stuck with trades that cannot be confirmed. paul levesque tried to buy shares of facebook multiple times on friday to his fidelity account. paul, good to have you with us. good morning. >> hi, carl. how are you? >> i'm good. you are retired. you have been since '96. you've been trading since then so this is not your first rodeo. walk me through what happened friday morning. you tried to get some premarket orders in and couldn't do it. >> yes. i tried to get premarket. fidelity is my brokerage firm. i tried to get premarket. they did say on the site that i could get it. but when i tried to buy it, it kept coming back that facebook wasn't a legitimate stock. so i waited and put in premarket orders for the regular market before 11:00. and then, of course, the
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announcement came on that they weren't going to open it and then they decided to open at 11:30. between 11:00 and 11:30 in watching the futures, i changed my order and put in a cancel -- attempt to cancel and replace. so i brought the stock down on my limit order from $44 to $42 in three processes. then the market opened and i changed it again at 11:31 and put in a cancellation at 11:34. >> right. >> okay. now i didn't receive anything for anything to be executed at that given point. >> paul, paul, paul, let me jump in it here. this is gary. why did you decide at 11:34 to try to cancel that order? just trying to figure out, you know, the thinking at that time? why did you want to cancel the order at that point? >> well, because my limit order
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at that given point would have -- i saw the stock going down so my limit order at that point would have bought it at a price i would have preferred not to buy it at. >> so you got executed at 3:45, correct? we ran a screen saver at 3:45 you got the execution? >> no. i still don't know what time i got the execution. the stock appeared in my portfolio after 12:30. i left the screen at 12:30 and didn't come back until 3:45, the 200 shares were in my portfolio. >> so you thought you had an order cancellation. you walked away from the screen. you figure you canceled all orders and then you were executed on those 200 shares, correct? >> that's correct. >> and what did you do with those 200 shares when you found out that they were in your account? >> well, by the time i had a chance to do anything, the market had closed. i called fidelity and asked them what the story was as far as the
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order -- when was it executed, and they couldn't tell me when the order executed. and i said, well, how can you put a price when you can't tell me when the order was executed. >> did you sell out those 200 shares in your account yesterday morni morning? >> yesterday morning, that's correct. >> you got out at $36 on 133, right? >> that is correct. now to add to the dismay yesterday morning -- i went the whole weekend, checked my account. nothing there. yesterday morning at 9:35 another 200 shares appear. so now i own 400 shares. okay? so i put in the stop losses for the first 200 that executed -- there tha were in my portfolio on friday. >> let me ask you this, because
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we're trying to get an idea of those who wanted to participate in the ipo last week and where we are today. when you initially wanted to buy stock on friday, when you initially put the orders in, were you trying to buy that for a week, a month, a year, three years, or was this a day trade only? because i'm trying to get the sense of people like up self now that the stock is printing $32.94, are you still looking to actively trade the stock? what was your time frame on friday and are what are you thinking today? >> well, i still have the 200 shares that were put in my portfolio yesterday morning. i haven't sold those yet. i had a chance to sell them at $33 and passed on it. that would have been through my broker. but my question is, i don't even know what order executed to buy those shares. it seems impossible to me that they executed the orders at $42
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and then couldn't tell me what time they were executed. it's just a sham. >> you've called it a tragedy. you said you can't win against the machines. does it sour you on trading in general? >> absolutely. >> it does? >> absolutely. unfortunately, i think facebook would have been a great opportunity to get the retail investment back in the stock. everybody uses facebook and want to be part of it. the way this came down, it's driving everybody away from the market again. >> paul, appreciate you calling in. a lot of stories just like yours out there, i'm sure of that. >> let me say this. i appreciate cnbc taking the time to look into this for the individual investor. >> thank you, paul. paul levesque talk iing faceboo. we did reach out to fidelity. they told us marketplaces and
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broker dealers experienced severe slowness friday morning trading facebook shares. unfortunately, those issues impacted our customers. >> and there you go, right back to the nasdaq. that's what fidelity is telling you. nasdaq not giving information quick enough. >> the chairman of the fcc will join us on efforts to get carriers to regulate themselves. on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary.
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the fcc is trying to find easier ways to enforce regulation. jewulia is with the chairman. >> reporter: wireless carriers and cable companies are facing a m major spectrum crunch. what is the fcc doing to manage this? >> this is the kind of problem we want to have as a country. it's a problem coming from innovation, from more demand. but it is a problem because the
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demand, we need to free up new by retrieving spectrum from government users, by removing regulatory barriers. it's an important priority. >> reporter: and so how are you going to do it? >> it's a lot of work. there's no single solution, no silver bullet. one of the big ideas we suggested was an idea for two-sided incentive options that would allow us to free up and efficiently use broad band. i was happy that congress passed that into law a few months ago, something we're actively implementing now. >> reporter: we're seeing some experimentation with usage-based data pricing. you pay more if you use more data and people are using more now because they're streaming more video. is this usage-based pricing a good or bad thing for consumers? >> well, in a changing sector, business model innovation is important and can bring real benefits. usage-based pricing with increase efficiency, can enable consumer choice and competition, it can result in consumers who
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use interbroad band less payless. >> reporter: are there going to be complaints when people all of a sudden trigger a data cap and are paying more? >> absolutely. and i think the things we'll look at and more importantly the things the consumer will look at is are the changes fair. are they treating users fairly? are they fair in the competitive landsca landscape? those are the issues we'll be talking about. >> reporter: a number of the tv networks and time warner cable have come out against dish's new auto hop. is this something that could be seen as illegal in the fcc's eyes? >> i'm not sure if there are any legal issues. business model experimentation is good. our advertising supported model is very good for consumers on our economy. at the same time new it technology, new innovation will drive new business models. we shouldn't discourage innovation. >> reporter: if the courts overturn the order to mandate net neutrality which is this ruling that all times of data should be treated equally by
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comcast and other broad band providers, what will that mean for the companies here at the cable show? >> when i took this job we inherit add big radioactive fight between the it technology industry and internet service providers that we resolved a year and a half ago with an order that adopt add framework that has brought certainty and predictability to the marketplace and that's working. across the broad band economy, apps and networks, innovation is up, investment is up, job creation is up. we're in a good place and should stay there. it's working and we should stay where we are. >> reporter: if the courts overturn it, what will you do then? >> i will not speculate but for everyone the system that we have in place is working and it would be unfortunate if we have to start the debate all over again. >> reporter: now a lot of talk about tv everywhere and the fact that it's not rolling out quite as fast as it should be three years after it was announced. what's holding it back and what can you do to help accelerate that innovation? >> well, we're seeing some -- look, three years ago, no one had ipads and we're here, not
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that soon, not that much later and not only do people have ipads but they're getting programs streamed to their ipads both from cable providers and satellite providers and to competitors. that's a good thing. consumers being impatient with the pace of change is a good thing, putting a lot of pressures on the traditional players and the innovators to continue to innovate and offer consumers programming, services of value. that's a good thing. look, america is back when it comes to broad band. we've regained leadership in mobile, in the wire space we've gone from only 18% of the country who live in areas with broad band infrastructure capable of 100 megabits. we're moving in the right direction. we shouldn't take our feet off the gas pedal. >> reporter: a lot of innovation keeping you busy. julius genachowski, chairman of the fcc, thank you for joining us. carl, back to you. i want to send about it back to brian shactman at hq. pcx, last week we talked
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about they reported a possible default by a major customer. a rumor out there they may have hired bankruptcy advisers. again, we only report on rumor if it's moving the stock. i'm not going to make a joke about dropping like a lump of coal but that is on the move, seriously more than 20% to the down side. almost 70% year to date. carl, back to you. >> thanks a lot, brian. i want to you keep those tweets coming, the facebook fallout continues. if you're the nasdaq today, what is your pitch to the next big ipo, twitter, to get it to list with you. send us your pitches. we'll read some of your responses after the break. [ male announcer ] the inspiring story of how a shipping giant can befriend a forest may seem like the stuff of fairy tales. but if you take away the faces on the trees... take away the pixie dust. take away the singing animals, and the storybook narrator... [ man ] you're left with more electric trucks. more recycled shipping materials... and a growing number of lower emissions planes... which still makes for a pretty enchanted tale. ♪ la la la
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i have a career that speaks to that passion. thank you, mr. davies. after nasdaq's bundling of the facebook ipo we're asking this morning if you're nasdaq, what is your pitch to the next big ipo like twitter, for example, to get it to list with you? hurry, all ipos 20% off while supplies and investors last. justin writes, orders may never get filled but the champagne is chilled and john writes nasdaq slightly better than bats is all you

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