tv Squawk on the Street CNBC March 11, 2013 9:00am-12:00pm EDT
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welcome back welcome back to "squawk." let's get back to our guest host mark zandi who has the last word. >> all morning i've been talking about the next couple of quarters and i sound dark, and i don't mean to. i am very optimist being. >> what happened to the last two hours? >> you forced me. in the next couple of three quarters we can't look past that that i do think we have issues in the next few months, but i'll give you one more last statistic. every housing start requires five jobs for one year and housing construction will double in the next four years. that's great news.
>> mark zandi, thank you for being here. >> thank you. >> steve. thank you for being here. >> you don't look like joe kernen. >> i definitely don't look like joe kernen. "squawk on the street" joins us right now. ♪ ♪ ♪ ♪ >> good monday morning, good monday morning. welcome to "squawk on the street." i'm melissa lee with, and let's see how we'll open for four straight record closes for the dow and it looks like the street may be pointing to a lower open. as for europe, news of the italy downgrade pressuring markets in today's session. we do have a loss in italy of .6% pf data overnight in china also pressuring the global picture, lending and retail all slower than expected and we did have a loss there on the shanghai. our road map this morning starts with the market.
the global economy front and center with china and the italy downgrade. the s&p is 1% away from the all-time high. >> cnbc has the copy of the ge letter to shareholders. jeffrey immelt, with less financial exposure and what the company is going to do with all of that cash from the nbc deal. a new development in the icahn-dell story. they have entered a confidentiality agreement. is this a step closer to get the company to do a leveraged recap. >> samsung is number one in china. sales tripled to more than 30 million. lenovo is number two as apple gets another downgrade, this time from credit agricult. the all-time closing highs and the s&p 500 on a six-day winning streak, but futures are lower. fitch downgrading italy's credit rating due to the political uncertainty in that country and
in china, data show inflation hitting a ten-month high while industrial production and consumer spending came in below forecasts and jim, for consumer spending, at least in china, we had to come off the chinese new year holiday until you would expect spending would come in higher and the food prices typically spiked during that period, but is this simply an execute to lighten up as we are -- we're on this hot streak here in the u.s. >> i think that's pretty much what it is. this has been a remarkable rally. we come in and we're looking for something to do. i know that that sounds a little stupefying. there's just not a lot of new names on companies that haven't done well. let's use the case of dick's, this is the chance to jump into dick's and you look at it, weather is not that good and what does that mean for vf? >> i guess what i'm saying is that everyone is looking for a reason to take something i don't know for a lot of people
who are looking for reasons to add to positions right now. >> a downgrade of italy, david, by fitch, that wasn't a reason to sell necessarily. >> no. no, there aren't many reasons to do much of anything this morning. it's relatively quiet for a monday. no deals and so you and i can keep going back and forth about this thing, but i will keep you in check of it on that. >> i saw someone that was reading thedeal.com. rumors of cit getting a bit -- and it's, like, wow! i could use that for ammo to sit down with david and say i told you. i don't have any ammo. i think you're right today. >> and something we've also spent a lot of time talking about and here is china and that does seem to be an influence on the markets and how and whether things are not quite as strong as might have been hoped forgiven the second half of last year. >> right. >> i did hear overnight reports that was funny. it's an echo chamber. i heard that europe was doing
better because our employment was better. maybe we should buy our stocks. there's this new feedback group that fitch tried to break the feedback loop. fitch is great they issued this, hey, listen, let's do spain. you want to downgrade france on wednesday? >>tt is the current rating on france? >> i don't know. >> industrial production was a slight miss. >> the yields are 2.09% and france is not too bad. >> your point on friday was take your profits and go home. you thought the shorts covered in the morning ended up not closing down and i wondered if the dips will get bought in faster succession. >> i was wrong friday and i did not see the transports continue to be strong. i don't want to be short for monday and short for the deals that are supposed to happen that didn't. this market defies a lot of what mark zandi was saying on squawk. i thought it was interesting. i am hearing good things from
the retailers and immediately what he said is jim, they don't know saying there's a lot of slowdown coming and there are a lot of cuts coming, and i struggle because what happens is i'm stuck with the facts, and the facts are good. the facts could change, but i'm stuck with them and all year i've heard that the payroll tax would kill us and the sequester is going to kill us and i've come out here and saying i'm waiting for it to kill us. in the interim the market is going up. sure, one day it will kill us. say we're up 12% that will kill us. in the meantime that was the 12% that you had to make. >> you wouldn't have missed the rally had you invested in fear of sequestration and all of the fears that never seem to come to fruition, not to say they won't still, but you play the hand you're dealt with and this is what we have here. >> in 1987 the market crashed in october. if you had bought stocks the larger, most actively-traded stocks that friday before the
crash, arguably, the most stupid day in history to buy, but if you listen to the commentary it was always that the economy was about to collapse because the stock market's always right. you know, i hear a lot of how the economy is about to collapse and this time the stock market's supposed to be wrong, but the economy is not fitting into the thesis of why people are buying stocks. they were buying the clorox's, and they were buying the kimberlies and now they're buying the steels and the down and out techs. do you reach in to those people buying and say, listen, dopes, you're about to lose everything or do you say they have more money and firepower and they seem to be buying like on friday where i thought geez, this is a nice place for a breather and i thought they'd be on the canon ball up to the 405. >> there you go again with montauk. >> they're sitting there buy right until the the close. >> did you buy property in montauk. >> you're the mayor of montauk, you would know if he bought property. >> i would.
he's got a thing now every other day. >> it's only going to get worse. >> that is true. >> robert shiller over the weekend writes this piece in the times that yeah, confidence is rising and i have no idea why. >> isn't it nice? >> and at some point, jim, that doesn't matter anymore. it becomes self-fulfilling and self-reinforcing. >> i said to mark zanned e what happens if we build 1.2 million houses. i'm beng facetious here. what i'm saying is the companies are telling you there's tremendous housing demand, but the figures have not moved up to reflect that. so once they start happening and we get 1.2. i don't want to say, you know what? that's why masco would go up. i don't want to be behind the buyers and yet, i think a lot of the economists who come on are behind the current facts. >> speaking of the broad economy. jeff immelt's letter to shareholders is out to ge.
it will make news later today and we have an advanced copy because we have that there. something he takes very seriously and works on a lot by himself. he talks about ge as a big sale gas play, guys. a big order trend in sub saharan africa which is becoming a very big part of the world. in terms of the macro, the major source of volatility and corporate planning in the u.s. is something i never thought i would see. it is hard to see that the u.s. would return to its full-growth potential. he says we're in unprecedented fiscal territory in this country which will keep a limit on growth in the short term and mentions the fiscal cliff, mentions sequestration and the number of regulations has exploded in the last few years, his words and the result has been an additional burden on business until we saw with these constraints it is hard to see that the u.s. will return to its full-growth potential. interesting take.
>> it owns general electric and they said it's a downbeat look and it is all upbeat. >> not to mention that they're buying back a lot of stock and returning cash to shareholders. there is a macro take here which is interesting because immelt seems to be coming out fairly strongly. washington can't get it together and we'll underperform on gdp and not never, it will be a while until we get to 3% to 4% unless you figure it out, washington, and the pace of regulation is constraining our business. we have a lot of money from nbcu and we'll send it back out. >> the top priority remains fwld building the dividend, andy hoo goes on to say in the second full screen, we plan to buy back shares to 10 billion to allocate the nbcu cache to rebfrp our
shares and we plan to return 18 billion to investors through dividend and buyback. >> if things are tepid. if things are precarious which is the way i read it because of the federal government i would not buy a share of my company's stock and i wouldn't return capital. i would wait with until it's either less precarious or it falls apart so i do find it a little counterintuitive to say all of these things after i've done the boilerplate issues i'm also going put capital to work. why not conservative? why not, dare i say, the apple? >> it's not like they're spending all of their cash to repurchase shares and if you are repurchasing and that's part of your strategy, i don't think you're to be in a position to say i'm not going to this year or the year after. you've just got to do it and we do look back and say why are you buying that stock back so high, but that's kind of part of the -- >> and then you go to the oil and gas.
oil and gas are the fastest growing business and earnings are up to 16. last week we bought -- he partnered down. >> that's right. >> 76. >> why not go by halliburton and baker hughes which is the principal builder of rigs and oil and gas and who is it for me to tell will jeff immelt what to do. why not put your money behind the growth areas rather than return the capital to shareholders. >> the stock action has been interesting. >> mira cuts it today from neutral and there have each been technicians who say the action on ge versus the dow does not suggest the rally on the dow is sustainable because it has not popped the way that the dow has overall. >> i think you've got to raise those dividends to get it rolling a little more. jeff immelt is right to say when shareholders want in general electric.
i think the stock has been pretty much a return on capital play. it has not been able to blow the numbers away. >> so at this point the valuation argument that they use to downgrade the stock that doesn't fly. you can't say trading at 18 right now and it's rich compared to itself in the sxaft you want to lighten up on this. >> i've seen the stock be much richer and i've seen the situation be much richer. i thought this downgrade was factuous and i look at how many times i could have downgraded disney. ? that's true. >> how many times i could have downgraded parker-hannifin. >> home depot. a lot of these names that have had long bases for a long time and shot higher and all of the analysts were caught off guard and feel the need to downgrade. >> in the early '90s where analysts were so quick to downgrade, intel. could intel go more than the 286
and the 386 indicated. there is the 486. hold it. that was the pentium. there are things happening in the corporate america that are better than what the analysts think because they're all living in the last ten years. any time the stock goes up someone's got to downgrade it because it's always been the right case. >> it has been. ge's stock was close to $60 a share in 2001. >> right. that's right. >> it was $40 a share in 2007. >> but not six, right? >> oil and gas revolution. they put more money behind oil and gas. the oil and gas, it keeps coming back and we keep getting this is a great industry and they're building compressed natural gas transfers and they're looking at the engines and locomotives that can use natural gas. they're at the cutting edge of this and this is a very early comeback for energy in our country and they're involved and
that's a good business. why shouldn't that grow faster than the gdp? >> it should, one would hope. >> when we come back we'll talk about news about dell and icahn and samsung topping the charts in china while apple gets hit with a downgrade and we'll dig deeper inside the cell foen wars and clara shih, what's her view on cheryl sandberg's views on women in the workplace. after four record dow highs last week, can we do it again? mondays have not been good in general with a pretty flat open. "squawk on the street" is back in a moment. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online soct in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me.
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dell dell shares moving higher. billionaire investor carl icahn has entered into a confidentiality agreement with the computermaker in which dell will allow him to take a look into the company's books, they argued the $24.4 billion buyout proposed by dell and silver lake partners. it confirms that icahn is on this track that he's doing something. >> before we broke the story that icahn was involved in dell and before the letter was released by the committee that he had sent them proposing a $9
a share dividend saying it was worth as much as $221. he had indicated to the committee that he might sign a confidentiality agreement, but then he didn't. they were hoping he would saying hey, carl, play with us. if you submit a qualifying proposal under the go shop period which would expire march 22nd. it would supersede michael dell and silver lake. it will be highly unlikely that he'll offer a proposal for the entire company which he might get and it's still a big might is some sort of a recap under the go shop that would qualify meaning he'd buy in a lot of the shares and he'd leave the leverage stub out there in some kind. i don't expect it. that being said, he's at least taking a look. why not take a look at confi confirmational like others and at this point, nobody expects that we'll end up with a higher offer for dell after the go shop expires and they can extend it
if they find something that has merit, but we'll see. the tension is still there. the op position is still there n a significant way. that won't be out for another week and a half until the go shop expires and there will be a lot in that proxy that explains what management's thinking and what they felt behind what they were doing. >> david, one of the things that is throughout this process mystifying to me, business has to be getting worse if you look at any of the inputs. so how many deals can you recall because you've covered them for a long, long time where the business is getting worse and yet the bids go higher? >> it doesn't happen often. it can happen, but it doesn't happen often. >> the tribune corp? that was one. >> that was one where they were locked into a deal when it was done. why it was funded by j.p. morgan and was it a few months, which by the way is now unwound and
it's interesting, with a potential candidate and you don't see it un. >> we now have the journal article which basically confirms what we thought and that is the longer dell is entangled with this sort of leveraged buyout and leverage red cap tango. customers are afraid of committing to dell. >> think so. >> that's what you're going do, certainly, hewlett-packard will tell you over and over again, people want to know who is there or not, private or public, you'll still have the same guy selling to you or lady, but it does create uncertainty and hp, when they were going to split company. why are your customers frozen? that doesn't help. >> a lot of the people who are purveyors of this tech and it's been dell versus hewlett-packard. is hewlett-packard going in and saying, listen, we'll give you half price right now or you don't know what will happen to dell? dell's private and dell's
public, it shouldn't matter. >> you can convince somebody, and there will abe lot of different things happening and we're here and not going anywhere. >> it's intel. it's mott. >> let's not forget mowhat dell spent on the enterprise. it's not just pcs. >> when we come back, what is the best way to ride the rally? cramer's mad dash is back. one look at futures and moderate weakness. we're off the lows after pretty moderately depressing macro data from all around the world. back in a little bit. [ coughs ]
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let's let's get this monday fired up and no better way to do that than with t t mad dash. rbs, good words to say? >> yes. one of the things that happened last week and i don't want to lose sight of this was that citi was the big winner and i expected many more firms to come out like ubs and go from hold to buy and say you've got to buy citi. if you think what can still be bought after the rally, and it will be the major banks and citi is behind the banks and i like this call to buy it. >> better efficiency, they're talking about, and fewer headwinds from citi holdings. >> this is a story where i was chatting, and maybe it doesn't matter. it's well behind the group and emerging markets are doing better and this is emerging
market play and they cut a lot of fat and couldn't believe there's still more fat there and i still think this is an inexpensive stock, that's a good story. >> piper on best buy. they're talking about a structural multi-year turnaround. >> where was amazon? remember when we used to worry about amazon and suddenly the forgotten new management and i look at dick's this morning and i say to myself one of my big worries with dick's is amazon. dick's had weather-related problems and carl, right here, we were worried about best buy going under and this looked like circuit city and suddenly best buy is in a renaissance and do you mind if i wait to see? suddenly everybody loves it and it looks like schultz shouldn't have bought the company. i think i need to see more than a quarter to believe in the idea that the company being amazon is done being amazon. >> piper does say q-1 could be misleading and it might look like it's not happening. >> a lot of people are saying
retail. you just wait for thatt moment and we'll find out it wasn't that good. i have to tell you, this stock maybe was down too much last year. i think it's up too much this year. >> it's been an amazing performance this year. >> when we come back, call it the drive for five, can the dow pull off the fifth consecutive session of all-time highs. the opening bell is in under four minutes. e over to mission a for a final go.
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which isn't rocket science. it's just common sense. from td ameritrade. you're you're watching cnbc's "squawk on the street" live from the financial capital of the world on a monday morning. the opening bell in 45 seconds. quick breaking news here. the ge board of directors has nominated mary shapiro, former chairman of the sec as ge director. she'll stand for election at the meeting on april 24th. as the old saying, you leave public service go serve on a few boards and that's a good nomination to get if you're going do it. >> she knows her way around the sec. we just got the derivative rules today and i know that's gensler, but there's obviously, if you have a lot of regulatory issues as jeff immelt indicates, she's not a big person on the board.
>> no. no. >> so let's await the opening bell here. it's at the top of your screen at the big board and the multisector black rock. and carolyn maloney who knows a thing or two about business news. >> sorry that we did not get a chance to talk about is samsung. samsung is in 2012 and what's interesting is they tripled their share in the course of a year so they're now up to 30% market share. they took it away, essentially from nokia who dropped from 30% down to 4% and lenovo is number two and apple. where's apple? number three. >> how much is distribution with the right phone companies? is apple the equivalent of not with verizon and at&t either? >> exactly. not having access to 700 million subscribers in china is a
handicap. >> we talk about how money would have been a good place to go. i would imagine the chinese companies that samsung made these deals and maybe they were abhorrent to apple, but they're working. >> right. right. right. and apple getting a downgrade from credit agrical, and the price target goes to 505 from 575 and the june carter they expect to be weak especially because they're anticipating the launch of a 5s and ahead of a launch you have sales slower of the regular 5 and that's going have an impact on the sales. oppenheimer, though, out with a note. the technical analysts are saying the charts look so bad that apple's a buying opportunity. so bad it's good, they're saying because if you draw a trend line in apple underneath it's now back to the levels prior to the parabolic move. so it was as if you took out that move and the trend continues to go higher and that's what carter likes about that chart. >> look, the stock does them and
i was thinking if it's monday, tuesday, wednesday, thursday or friday that means apple is down. >> did you say monday? because it's down. >> it was one of those days of the week. i was looking at the calendar and there were a lot of business days each week and there does seem to be a real move down and i don't like to second guess the chart and when the chart says things are bad i don't say, wow, it's so bad and it's head and shoulders and it will turn into prel. i need to see it stabilize or estimates stabilize. i give you the usual litany they need to buy something. this chinese samsung story is daunting. obviously, people like the samsung. they like it. >> have you mentioned what's happened to the nokia share in the past couple of years. >> 30% in one year. 3% the next year. 33. 30 to 3. >> this can go away. >> it's almost jc penney numbers' loss of numbers.
>> you mentioned that, i'm all years. jc penney, martha stewart, apple? >> speaking of which, we'll get a lot of retail earnings this week. costco tomorrow, express, men's wearhouse, aeropostale, and i wonder if it will affect the feeding 14s sneet gift that keeps on giving to a lot of retailers. i think costco has been a serial performer. they returned a lot of money to shareholders. i still think that when you go over one of the shocking things that we didn't talk about last week, safeway and kroger are doing quite well. a return to the regular supermarket, a fresh market. they were doing terribly. >> why is that? >> one of the reasons why that stock keeps getting hit is in the call on fresh market they say we don't know why people stopped shopping here. >> we don't know why? >> that's terrible. >> give me a thesis there, but this is a weird trade from the -- from the traditional
supermarkets which have been doing quite badly. whole foods, elephant in the room, retail, you either have a terrific retailer like fresh market saying wow! what happened? >> i know you were just talking about retailer best buy with carl. >> yes. >> but i did want to comee back to it because when you look at this $20.40 stock price, a, i wonder if schultz will look for an kit, by the way. >> who? >> this is so far above what he would have been able to do a deal at. it really -- >> these are i highest levels since august, right? that was prior to when he entered. >> yeah. >> we have a lot of kids going to college, jim. maybe your college dorm play is having an effect. >> in march? >> i'm making something up. >> no! no! this is housing related. i continue to think that that best buy, was there one point when you got a new house and you
put starter equipment in and you don't necessarily go to costco. you may actually want someone to come to your place and help you and best buy -- last man standing. i like the last man standing thesis. i also know that amazon lurks forever, and i just think it's an okay business. i'm shocked the stock is at 20 is what i'm saying. >> i'm shocked. >> you don't like barnes & noble, do you? last man standing? bed, bath & beyond? >> i don't need someone to install it. >> good point. >> we haven't used best buy very reluctantly because i would have loved to do amazon. i was setting it up for my father and i was overwhelmed by the different issues and getting the net flicks going and trying to get the roku. that's like the emoji, i don't know. i'm hopelessly old, and i need best buy to help me because the new things are -- they elude me.
remember the disthat you get with netflix? still like them. >> did you do one a month or two a month? >> we can't get wi-fi where i live. >> streaming. i'm streaming. >> it's the equivalent of the car engine. you used to be able to maybe do a tune-up in your garage and driveway, forget it. it's computer engineering now. >> filled with texas instruments and semiconductors and best buy, if you decide -- i remember at the height of best buy, they were doing inhome theater and that was a huge margin business and amazon was not in the inhome theater business, if people get wealthy enough to do that in. >> for audio, you can do jawbone and have your speakers and work them right off of your -- >> jawbone? >> i'll tell you all about it. >> i'm still trying to send an emoji st. patrick's thing to my kids. i always want to spell it
differently. when i'm saying is that there are a brand new gup roup of devices. >> and we're all too old to use them. >> true. >> and you need have children. we're old enough to do it. yours are maybe a little bit too young, david. >> we're hoping. >> every year he's getting close. >> any day now. >> i know you guys talked about dick's and i want to circle back because it is down by 8.5% and what you were saying about the weather is interesting, and they were talking about taking down the inventory because it was unseasonably warm and they missed out on the sales because they didn't have enough cold weather items and they got too cute on the inventory and -- >> and cabella's has more gun sales and we know gun sales are very strong. dick's is a terrific story in terms of how well they've taken over the country, but they are hostage as underarmour. not as much as nike and weather,
it was are one more thing that went wrong for retail and here's one that got dinked and most retailers have been able to find a way through this weather issue, but dick's? no. >> briefly, at&t is out officially launching the blackberry z10 march 22nd. $199. and there were reports on various carriers saying they'll take it. blackberry earnings, by the way, i think next week. >> shares are ticking higher on this. >> i'm waiting for the analyst who says right now they're worse than expected. the sales. i mean, have you ever noticed it that they have these -- >> it hasn't even been on sale yet and not even one, but they're worse than expected. >> the expectations are worse than expected. makes sense? >> yes. we have unconfirmed rumors that -- >> channel checks indicate that the orders are worse.
channels. >> i'm raising my price target. some people raise the google price target. >> or go 1111. >> people are looking for something to trade off of here. >> something to do is what it amounts to to keep busy. >> i used to go to the movies on days like today. >> how about now? what do you think? >> i don't want to see it. did it get battered? >> it did 80 million at the box office, but -- i don't know. i'll netflix it. let's find something else. you netflix it? >> soon. >> let's check in with bertha coombs. she's in for bob pisani this morning. >> i went to oz this weekend and for a blockbuster open there were empty seats at the screening i went to and that normally doesn't happen at the theater where i go. not much on tap in the u.s. and we look at what happened over the weekend from china. that's disappointing and that has the european market lower
except for britain, the uk and a five-year high and they had data that was better than expected and the confidence index was down less than expected and meantime, that fitch ratings downgrade on italy has italian yields moving higher. what's interesting is the relationship between the italian and the spanish yields. since the election, we've had spanish yields and italian yields getting closer with spanish yields coming down and italian yields coming up. andrew brener over at national alliance says the interesting thing is despite the turmoil in the election, italy's fundamentals are better than spain. he thinks spain is handling the headlines better and an analyst says that really underscores the ecb's backstop, the security fund there is helping to contain the contagion. meantime here in the u.s., what's interesting is you guys have been talking about retailers all this morning and dick's, of course, the big loser after missing and lowering its guidance got amazon off a bit here. and amazon trying to get the
domain names for .author and .books. and barnes & noble inching up a bit on that news. overall, this morning we have consumer discretionary, and it's the best performing sector so far in march led by the likes of best buy which is up better than 20% on the month adding more with the upgrade today. gap also up double digits and the radioshack up nearly 10% and starbucks among the big performers. we've seen airlines, and the airline index and seeing a little bit of profit taking, guys. a number of folks, this unloved rally. a number of folks saying this rally is starting to look a little tired here and without much of data points in terms of economic numbers this week to move us ahead, you can see a bit of a pause. nonetheless, given some of the negative news over the weekend, we're holding in this morning.
back to you. >> it makes sense. morgan stanley came out today and says the move in the airlines may be overdone. i like that group and we've come down a little bit and i think it will surprise people because of the consolidation because again, it was up a lot, and i understand that. let's head to the pits with rick santelli. >> normally the week after the employment is a slow data weeks, but since it was the second friday of the month considering the duration of february, and retail sales and threes, tens, 30s to start tomorrow. two-day is probably the best and we continually link and delink the stock. right now we're relinked at 2% and we're up at 204 and unchanged, but it seems there's never real any selling push after these better than expected data points and open the chart up. we are hovering at the best highest yields depending if you're short or not since april. let's switch gears and let's look at some of the sovereigns
in europe and if we look at a german ten-year. the ten-year boon it's 150 basis points and it's widening up against on the spread with treasurys and now well over 50 and it really is pricing in weakness in the european front. if we look at the french ten-year and the italian ten-year, what we find is the french is close to unchanged a little over 2% and you can see the yield isn't doing much, but the italian is reflecting as it gets closer and closer to this 6% level and it is reflecting some selling pressure, but maybe not commensurate with the downgrade and some of the issues on the political front. if we switch gears again, the biggest currency today, it's normally the dollar yen and i think it's the pound today and as you look at this chart, you can see the pound has had a significant dropout not only today, but we look on the broader chart to three-year extremes in the dollar's favor.
we're now back to june 10 and we're three month away from that three-year comp. jim cramer. back to you. >> thank you so much, rick. good to see you. let's check out the latest and we go to jackie deangeles. >> crude oil prices are lower this morning and traders looking toward the industrial output numbers and retail sales feeing urs as concerning and also chatter out there that saudi arabia has increased its output. that would be next month and we're looking at a stronger dollar as well. west texas intermedia, under $20 a barrel and brent crude about 110. we're looking at declines across the board with the exception today of gold trading slightly over the flat line and traders point out despite the decline in equities this morning that they expect this rotation out of commodities into stocks to continue. back to you, melissa. >> thank you, jackie deangeles. still to come, listen up sneakerheads and google is getting its best foot forward at
this tech and media conference. we'll explain. also ahead we'll take you to south by southwest to ceo dennis crowley. that's straight ahead. [ female announcer ] what if the next big thing, isn't a thing at all? it's lots of things. all waking up. connecting to the global phenomenon we call the internet of everything. ♪ it's going to be amazing. and exciting. and maybe, most remarkably, not that far away. we're going to wake the world up. and watch, with eyes wide, as it gets to work. cisco. tomorrow starts here.
google unveiling the prototype of a smart shoe at south by southwest. the latest gadget can log your running time, give you advice and even encouragement for runners and that brings us to the question, what is the next article of clothing google will hack tweet us. it the air the responses throughout the morning. >> everyone needs encouragement while you're exercising. >> all of this wearable stuff that you download to the computer, a, i think it raises prior see issues. >> completely. >> data collection which is valuable for these companies. google, that's what they do, right? >> there's a report about a bar
in seattle that will give you a rear kicking if you wear the google glasses on premises. so there will be pushback from the societal norm, right? >> i like the fitbit. i think fitbit is neat. see how many steps you took -- >> nike fuel band? >> i don't know -- i roll my sleeves up and i don't want people to think i have the nike fuel band and i don't want to advertise for nike, but the nike fuel band also has very good features including how many calories you lose while sleeping? >> how many do you lose? >> i don't have the nike fuel band. >> how do you increase what you lose? >> turn the heat up? bibbi bikram yoga? >> leave stae citi out of this. how's yoga doing? that's a yoga position. >> thank you. i appreciate it.
>> here's what's coming up next on "squawk on the street." >> coming up, launching into a market like this could be tough, but we have someone here who can help minimize the damage. jim cramer and six stocks in 60 seconds. he may just give you the lift you're looking for when "squawk on the street returns."
let's get to simon hobbs and see what's coming up on the ten. >> we'll take a good look at these markets and the trends slightly lower so far today. where do we go from here and what do we expect from the fed? we'll talk to that analyst and we'll look at one of the women that cheryl sandberg has ment mentored as she attempts to lean in. thanks to you guys. >> "six in 60." six stocks in 60 successes. >> altera. this has always been a two-horse race. i have to tell you something. altera is the one to go. keep xilinx. >> tupperware? >> this has been the direct sales company that has done quite well. i think that's a mistake.
this is not herbalife. >> downgrade for adobe. >> it's had a very big run and this is a valuation call that makes sense to me. i don't see adobe having that much momentum. >> what's the news on owings, illinois. this is a company that makes glass. i've always said it was a cheap play on european glass. >> it's been on melissa's show and "mad money." people think he should take over and i think their earnings are terrific. >> price target up for crm. the sales force reported a terrific quarter. >> look at this. i do think he can go to the 215 price target that they have. >> what's coming up tonight? >> i have chart industries and this is the single way to play gas liquids and gtls, gas to liquids and they make all of the different tanks that you need and i'm always trying to keep the natural gas story in front of it because, boy, we have a lot of it and the chinese ahead
of it from gas to liquids. >> we mentioned some of the retailers coming this week and we'll get mortgage apps and claims and inflation data, as well. does the tone feel good to you? >> i think it does. i was at the jersey shore this weekend and the rebuild is almost nonexistent and we have a lot of fema money coming in. it's still plywood down there and it's rather amazing and i think people underestimate the possibility of a rebuild and 60 million coming from fema and i saw this with andrew in the early '90s. >> finally, we are getting a break and a lot of discussion on oil and the supply coming online. is keeping fuel costs down at a time when they would normally be going up as growth returns? >> i would like to see gasoline coming down and so much of the refineries which were set up to handle dirty keystone, this mismatch has kept your gasoline higher than it should be. >> we'll see how the week shapes
welcome back to "squawk on the street." let's get the road map for the next hour. it is 1% away from the all-time closing high, but as we turn slightly lower today, will a slew of disappointing china data and the budget impasse from washington kill the rally. >> best buy catching an upgrade, saying best buy is in the beginning of a major turn around process and is this for investors getting back? >> sheryl sandberg focusing on how women in the workplace can grow their careers and a look at
her rise to the top with one of her google co-workers and author of the facebook era. first up, in his letter to shareholders, ge ceo jeff immelt saying economic growth will likely be better abroad than here at home and the company's top proi orit for 2013 is growing its diffidevidend and h confident in the emerging markets and corporate planning and will remain below its full-growth potential. immelt citing the fiscal cliff and increased regulations andy immelt adding that ge plans to return, dividend growth and buybacks and downgrading to neutral from buy, saying the positives are reflected in the share price and it does see limited upside. i think nomura's price target is 84 where we are right now. after a six-day win streak for the s&p and for sessions of all-time closing highs, the u.s. market is seeing red today.
will the recent rally be able to overcome headwinds out of china and washington. let's bring in michael jones with river front investment group and warren mccarthy, chief financial economist with jefferies and company. good to see you both. >> want to start out with you and what the ceo has said in the annual letter to shareholders that u.s. growth will remain below its full potential. it seems like what economists and ceos are telling us about the u.s. economy is different than what we're seeing from the markets is record high after record high, ward. where do you stand on the u.s. economy and whether it supports a market's run to new record highs? >> well, the u.s. economy is very resilient. it will continue to grow and right now it's slowed down a bit because of fiscal headwinds from washington, but that's not going to derail the economy, and i think we'll be looking at 2.5%, 3% growth numbers by the end of the year. so we just have to slog through the mess that washington creates, but on the other side
of it there were a lot of good things happening in the u.s. economy. and the economy and the markets have not been connected for quite some time primarily because of the fed's qe. the qe tidal wave continues to gain momentum and that's been the main driving force, i think behind the performance of the equity market and as a firm, we think it will continue to be. >> so, michael, do you see what ward sees in that the u.s. stock market and the u.s. economy are largely disconnected that the point. so does it matter? the data points matter, obviously, but what immelt is telling us does it matter for your business? >> i absolutely think it matters buzz what's happening in our view is there are sort of two countervailing forces at work in the u.s. economy and the first and i think the most important, is the recovery in the private sector because of an improved consumer debt situation through
refinancing and default and just simple time allowing car loans and other installment debt to pay off, the u.s. consumer is in a much better place than they were two years ago and that's allowing recovery in the debt-driven sectors like housing and autos. by contrast, you have the federal government starting to pull back on its aggressive stimulus. that's a headwind, but the non-farm payroll data seems to suggest that the private sector is more than strong enough to overcome that headwind and importantly because of that fiscal drag, i think you'll see the fed stay aggressive. they don't want to be pulling back on monetary stimulus at the same time that the federal government is pulling back on fiscal stimulus. >> it was interesting to see the journal's hillsenrath with an art beingel out saying we've had a great jobs number, but they want to see many, many more jobs numbers effectively before they start pulling back. there is some sort of put under this. >> absolutely.
i think you could see something of a goldilocks for the equity markets this year. you've got the recovery in industries with high wages and big multiplier effects. autos and housing. that's where your earnings come from. you've got the federal government giving more clarity on how they're going to get debt under control and that allows risk premiums to come down and finally the fiscal drag keeps the fed aggressive which keeps the qe pouring in. >> you really think the federal government will give clearer signs as to how to get debt under control. i've been saying this for weeks on the program and immelt is saying something important again today where he says the major source of volatility in corporate planning is the united states. it's clearly a finger pointing of what is happening on capitol hill and again, this is a man that's returning large amounts of cache to shareholders, presumably as a result, michael. >> yeah, but i think that even though gridlock is not the
prettiest sight to look at, it is, at least, predictable. i think we can now say that the tax increases that we saw in the beginning of the year will stay in place obviously. ryan pulled back from any axe tem attempt to repeal them in his budget proposal. you have the sequester cuts that are taking effect and there seems to be no plan to get them back. we may not like them, but they are at least predictable and they're starting to get the deficit on a downward track. where i think immelt is absolutely correct is the regulatory environment is still a headwind for the private sector, particularly on the banking side, and i think that's one of the reasons why credit expansion is so slow and so incremental, but remember, as long as the banks are slow and expanding their credit that allows the fed to keep the qe coming. >> so, ward, getting to that point, in the period where you say we'll slog through economically, the regulatory he headwinds, are they the greatest
for the economy or just economic indicators. >> we've made a lot of progress in this economy. the unemployment rate has fallen by more than two percentage points and we've generated 6.4 million jobs in the private sector and we still have a way to go to replace the jobs that we loss, but what we're carrying, is the recovery in housing and the energy sector that is blossoming and we still don't know how many blossoms there will be on this bush and there were secondary effects in that it's keeping a lid on oil prices and keeping a lid on goes lean prices and benefiting u.s. manufacturing that ce ing thain over to the cost advantage over any place else in the world. so, yeah, the u.s. economy is perking back to life and i don't think washington can offset that. >> so not a headwind at all. michael, back to you, in terms of the sectors we like in the market, do you see a rotation to
the sectors, being down technology, materials, et cetera? >> we think so, and we'd add industrials to that, as well. we think one of the most exciting areas of the market is the asset class this we call high volatility and it's moving away from the growth and value that was -- >> what does it mean for average investors, michael, high volatility sectors. >> it's a grouping of the risky stocks. the stocks that have a lot of volatility. for example, is apple a growth or a value stock? you don't know, but you sure know that it is a volatile stock. so it's taking together all of those beaten down, high-volatility names into a single asset class. the reason why we think that's exciting is investors that have come back into equities have preferred the low volatility dividend stories and that makes the higher risk names much more attractive from a valuation perspective and if we continue to get the private sector chugging along, then we think that those are the areas that are going recover strongly in
2013. >> give us a couple of other examples just to firm up that example of high volatility stocks and you mentioned apple or are there others that come to mind? >> we like the financial sector at large. we think you are going start seeing some loan growth and importantly, every time house prices start notching up you lower the amount of reserves that banks have to retain against their mortgage portfolios. so i think you can see some reserve releases. i think you saw in the stress test that banks are extremely well capitalized and better in the u.s. than they are in the world, as those debt-driven sectors of the economy continue to recover. >> you can leave it there. thanks so much, michael and ward. >> thank you. >> thank you. dell shares are moving higher after billionaire investor carl icahn has entered into a confidentiality agreement with the computermaker in which dell will give hem a look into the company's books and start to
see material non-public information. icahn sent a letter to dell board members or a special committee of that board arguing that the leveraged buyout performed by michael dell undervalues the company at the 1365 price. he says you could do a $9 special dividend and still have a stub worth where the stock is right now based on a pretty aggressive multiple from what would be a highly leveraged company. but he did not choose when he released this letter or i should say sent it to the special committee which then released it to join the current go shop. that go shop expires march 22nd and he innocented to find potential buyers for the company or top proposals from the buyout offer from silverlake and michael dell. highly unlikely. i will even use the word highly that carl comes forward with a full offer or even what would be a qualified proposal to perhaps buy the equity and leave a stub
out there, but as one person put it to me sowell kwently, you have people in the tent and why not come on in and join them and if you want to leave later and piss all around it. >> is that a direct quote? >> you come in at the ten and take a look around and enjoy yourself and see what's going on and then you can leave as opposed to the way mr. icahn chose to do it. >> before going into the tents? >> exactly. >> when you leave as you've been into the tent, presumably you are less able -- you are less well able to fight outside because you can't say what you saw when you were in the tent. >> well, good point, although the proxy will come out very soon after the go shop expires and within that proxy we will get an enormous amount of details about everything that went on behind the scenes and we'll see management projections for the business. the best case, the worst case. so arguably, we will all know what he will now know as part of
the data room, there will be some other things that perhaps we won't, but much of that will become public and that's something else for people to keep in mind and whether you believe 1365 is the reasonable price and whether you were in the camp of icahn and southeastern, let's wait to see what the proxy does say because there's information that's informative. it will come out most leakly the end of march. >> i'm still trying to get the image out of my head. >> i thought that was excellent. best quote of the day. when we come backs, piper jaffray saying the retailer is in the early stages of a structural turnaround. will it be enough to get investors back on best buy's good side? >> the south by southwest. a hint, it's got a little something to do with a talking shoe. details on that after the break.
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austin, texas, is alive with the excitement of the south by southwest conference and the cutting edge for technology. it's where twitter and foursquare first gained axe tension. google is the focus of many headlines with the latest gadget. i guess, julia, you would say pair of gadgets. good morning. >> yes. pair of gadgets. good morning to you, simon. we have seen a couple of people wearing google glasses around here in austin, but the google gadget that's drawing the big buzz is a pair of sneakers. that's right.
the google team hacked a pair of adidas sneakers. google is being very clear that it has no plan to actually -- shoes. adidas sneakers are connected with an accel rom ter and gyroscope. trainer in -- >> obviously, we're having satellite issues and we'll have julia back in a little bit. >> maybe the shoes are interfering with the satellite truck. >> maybe. but we want to get to our tweet, of course, because our whole twitter question has to do with these shoes. the smart shoes that have been unveiled by google at south by southwest so we are going ask you what with else google should create and what should it be able to tell you? what other device should google have? so you can tweet us and we will share your thoughts throughout the morning. >> it can even dish out trash
talk. >> i thought it was encoura encouragement. >> really? >> yes. i guess it could be -- >> it's very noisy, you have to ask them to speak up, otherwise. >> you think of everything, simon. you should go work with google. >> feeling the burn. >> right. pick it up, buddy. >> best buy getting an upgrade from piper this morning and the analyst citing renewed conference in management's turnaround efforts and joining us this morning the analyst behind the call. peter key, the senior research analyst. >> good morning, carl. >> you're talking about something that people have wished for for a long time and gross margins not only stabilizing, but growing domestically. what led you to all of this. we've been looking at best buy, and they have a new ceo that came onboard in the fall and an impressive cracks fo that worke december.
we think there's substantial improvement opportunity here across the organization look at potentially stabilized sales and improved grows margin and take-out price expanses and dry-free cash flow and it's basically just taking an important, but fairly inefficient organization that's underperformed the last couple of years and driving better efficiencies up and down the company and we think that will play out for several years. >> you talk about the risks to your price target and obviously, the general economy, discretionary purchasing and competition like you say just one word, competition as if the word showrooming or amazon.com had never been a concern. are those really less of a worry now? >> in my view, those are -- the headwinds from competition, i'm going to cite apple and amazon.com are over. i think the headwinds are diminishing and we look at apple and it is still a very important company where you're seeing competitions in tablets and smartphones particularly from
the an droid-driven devices and they're a better margin and best buy gets a much better product allocation of android product. if they're picking up as they seem to be that's a ba positive for best buy. >> number one, amazon is starting to charge sales tax across the country. 50% of the u.s. population will pea for amazon as a new purchase and they've implemented a price match pricing to match pricing with amazon. the bottom line is there's not a lot of pricing disparity on big-ticket items and they're attacking that prer sepgz issue with price match and you'll see that in the coming year. >> in the latest quarter when it reported free cash flow it's reduced guidance of $500 million. some analysts are saying that the 900 some-odd million that they took in in free cash flow wasn't a clean number because they moved payables to the
current quarter. i wonder what your take on that free cash flow was and what you see in the future since we didn't get the cleanest reading. it really wasn't when you dug through the numbers. >> yeah. my view is that they are just getting started on reducing working capital and driving free cash flow. if we think about the supplier community, it had a snapshot during the fall sort of a scary snapshot of what the world might look like without best buy. that is not a good world for major suppliers so now you have new management team that's better leveraging its dominant market share and basically saying we want to get closer with the suppliers and i think ultimately that will drive better terms and whether that's better pricing and better margins or even better payables. so i think the free cash flow yield should remain at least $1 billion for at least the next up can elf years on an annual basis. >> if you think of online retailers against bricks and mortar retailers, aren't online
retailers always going have lower cost spaces and therefore they were able to undercut prices onner maintain higher margins. isn't that always going to be the case or are we missing something here? >> let's just look at the facts and if we look at tvs and that's been a problem area with best buy with regard to competition from amazon.com and other online competitors. >> best buy has a 25% market share in tvs. amazon, has a 4% market share. what best buy hasn't done the last couple of years is leveraged that market share strength. at the end of the day, they should be getting the best prices and they should be as low priced as everyone in the online community if they're working closely with suppliers. we think that's happening and we have a perception issue and that's what they can attack and change, and i think if you go online and if you look at a lot of tv prices you'll will see prices are pretty comparable at best buy. >> finally, peter, the investment they're making in marketing, super bowl ads,
dotcom. how aggressive can they be when their balance sheet doesn't have unlimited cash, let's put it that way? >> they're making investments in year with advertising. i think where you will see the major change is with their online advertising. they've really not had a lot of expertise with managing their e-commerce business and with their online marketing. they have a new head of e-commerce that they hired from expedia. they'll be ramping up more online advertising there, doing more cookies and google search and key words and things like that. i think that will be a major focus and more of the tv advertising and i look for the online price match mesa knowledge to be coming out more and more. >> peter. appreciate that. interesting call. >> peter keith over at piper. >> in the meantime, we've established our satellite connection to julia boorstin and we were talking about the launch now of google's shoe at south by southwest. back to you.
>> that's right, simon. google has hacked a sneaker. google has said it has no plans to actually prototype the shoe and we shouldn't any gooing tgl start selling shoes any time soon. these ones are connected with an accel rom terry, a gyroscope and pressure center and connected to a smartphone and it ends up being like your own trash-talking personal trainer in your shoe. >> let's do this already. >> these shoes are designed to get you to move by telling you how you're doing. google says it aims to spark discussions about how creativity and technology can work hand in hand for marketing and google shoes may not be for sale, but there are other wearable gadgets on the market here. >> i've seen mortgagets at this conference than i've seen in any of the prior years and it feels like this will be the year of the gadget. >> one of those gadgets here at
south by southwest is this tiny mimoto life-blogging camera. it takes photos every 30 seconds and it costs about $280. kleiner perkins described the rise of gadgets here as atoms making a comeback. he attributed it to inspiration from steve jobs' gadget making at apple and he said that cool technology, cool gadgets can be a lot more engaging and have a lot longer life span than an app, but we'll see how they're taking off. i think it's bad that gaggle meet not have the shares. how often do they take 45 photographs? >> every 30 seconds. >> i think they should give one to each thinker of "squawk on the street" and we can compare monday morning what we've seen. >> it creates a digital flip book. you can document your life without putting any effort to it. >> yes, i like it.
>> julia, have fun. it looks like a great event. julia boorstin, live from texas. >> my life is not that interesting. every 30 seconds is a lot of information. >> it goes into the brain. >> like that kid in that movie. >> dead people? >> all right. still ahead, it could happen this week. the s&p 500 poised to hit its own all-time high. what will it take to get us there or is this rally in jeopardy? plus facebook board member and chief operating officer sheryl sandberg calling for women to lean in and embrace success. her new book is generating a lot of buzz and we'll be joined by author "the facebook era" clara shih. back in two minutes.
the company has indicated also a press release just hitting the wires about coinstar looking into possibly get into the automated coffee machine market and you see the redbox video kiosks? could those carry coffee some day? that could be the plans in the works. >> thanks so much, kayla. >> the house budget committee chairman paul ryan will unveil his budget proposal tomorrow. our chief washington correspondent john harwood has more. great piece by you in the times today trying to lay out a plan, a bridge between the president and congress. it looks like there may be one, narrow as it is. >> reporter: there's a possibility, carl. this is the week that what the white house calls regular order that begins to really kick in. that's the budget process that we've become used to in years past when we weren't having constant crises over debt limits and continuing resolutions and all of that sort of thing and sequester cuts. so what you will have is the president is doing intensive outreach to the hill and he'll meet the republican and democratic caucuses in both the
house and senate to reach out. paul ryan will unveil his budget and he said yesterday on fox mu news that his budget assumes the repeal of obama care, but he also made this conciliatory remark about the possibility of getting together with democrats. >> i think there are things that we can do that don't offend either party's diplomacy, that doesn't surrender the principles to make a good down payment to get this deficit under control. >> that's the key. trying to make it so neither party has to abjectly surrender and republicans finding a way to accept some revenue increases perhaps through tax reform and democrats being willing to accept some entiming the and structural reforms that don't go to the voucher or premium support that ryan favors and reshuffling parts a and part b of medicare and something paul ryan has talked about and he'll have more on that in the interview with larry kudlow.
>> can i ask you about the letter we got from jeffrey immelt at ge when he says the major source of volatility in corporate spending is the united states, something i never thought i would see. it's hard to see that the u.s. will return to its full-growth potential. is there a continual pressure these politicians from big business, from corporate america to basically smack their heads together and get a deal done or are they actually, is big business actually now impotent on capitol hill given the deep divisions that there are between the politicians? >> reporter: pretty much everybody is impotent on capitol hill as far as the two parties are so far divided and relatively equal in power so that neither one can overwhelm the other, simon. we did see at the end of the year during the run-up to the fiscal cliff, business got involved in a very serious way to fix the debt and other public outlets and we're trying to knock heads, as you said, to get a deal. they got a little bit frustrated when that didn't turn into the big deal. it was a small deal to raise
some tax revenue and business has been pulling back a little bit since then and people like jeff immelt who headed the president's job council have the ability to continue to put pressure, and i think as they see the possibility for an actual breakthrough which is small, but not vanished, i think that is an incentive for them to get back in and give it another try. >> interesting. >> okay, john, thank you very much. john harwood in washington. >> gas prices have fallen nearly 6 cents, as the first drop of the year. a deeper dive into that slide and whether it could get bigger ahead. steve schwarzman will be here and carl will talk about potential headwinds to the rally and he'll ask about the dell deal. stick around. we're back in two. ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪
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>> one hour >> one hour into trading. the storieses we're squawking about. 7:30 on the west coast. 10:34 on wall street. a at&t announcing it will kick off presales of the blackberry z10 smartphone tomorrow with sales of the device beginning march 22nd, johnson & johnson, and 3m among the stocks hitting
all-time highs in the session and the vix just about 12. >> just last week news broke of the obama administration beginning to consider more assertive, to combat cyber espionage, enhanced cyber security services is looking to get approval. our eamon javers who knows more about this than most have ever known joins us from washington. >> hi, carl. the president's executive order on cyber security already yielding surprising results here in cooperation between u.s. intelligence agencies now and corporate america. the new program which went into effect in february is called ecs, as you say, or enhanced cyber security services and let me give you some of the details of how this program is to operate. it builds on an existing level of protection for defense contractors, what they call the defense industrial base. this new program is run by the department of homeland security with input of u.s. intelligence agencies and in the past, dod has shared highly classified what they call threat signatures of cyber attacks with u.s.
telecom carriers. this includes information that's at the secret level and above in terms of the classification and those carriers sell the enhanced security protections to u.s. companies and carriers participating in this program include at&t and century link. the new program was authorized in december and it went into effect in february and the goal here is to protect u.s.-critical infrastructure from the attacks from cyber espionage coming from china or from other countries around the world and state-sponsored espionage is the goal and it involves a new level of cooperation between intelligence agencies and the companies themselves and that raises questions including privacy and also efficacy. if you're putting this information out to u.s. companies, there is a danger here from the intelligence community's point of view that the adversary can figure out exactly what the intelligence community knows, but the intel folks tell me they've weighed that risk and they think it's worth it and they need to stop the incoming cyber attacks and the way they do that is to start
sharing some of this classified information they have with the companies that are best positioned to prevent these attacks, guys. >> eamon javers in washington. >> facebook coo sheryl sandberg is calling on women to lean in and embrace success in her new book. she's igniting controversy over her views on what is holding women back in the workplace. sandberg appeared on "60 minutes" last night. take a listen. >> i am saying and i want to say it unequivocally and unapologetically that the data is clear that when it comes to ambition to lead, to be the leader in whatever you're doing, men, boys outnumber girls and women. >> sandberg has been a mentor to our next guest since they worked together at google. she also replaced sandberg on the starbucks board. clara shih is founder of hearsay social. clara, can you hear us? >> yes, i can. it's a little bit spotty. >> we'll give it a go here, clara. you've been getting the lean-in
message directly from cheryl for years now, while people around the world today now are reading it. you say that it has changed your life. in what way, specifically? >> well, i've known sheryl for over five years. i met her at a conference and for years sheryl's been giving advice and encouragement to women like me to lean in and not hold ourselves back in any area of our lives. >> do you agree that it is a gender divide that, you know, the clip from "60 minutes" that we showed our viewers indicate if you study, who wants to lead, boys outnumber girls by a large margin. do you agree with that? >> i do. and the data is compelling that there are different expectations that society places on girls versus boys and that just continues to widen over time. >> so what did she tell you to do, clara? how did you go about implementing this lean-in message firsthand? >> i'd say that she affected me
in a couple of ways. first, just by being a role model and by leaning in herself, she showed all of us that we could do it and we could have a family and a rich personal life in addition to a rich work life. and secondly, i would say that she's inspired a lot of us to lean in not just for ourselves, but for others as she has done, just reaching out and mentoring other women, sponsoring women who work at my company, hearsay social. continuing to mentor young girls outside of work. >> it's -- good morning to you. it's clear, clara, that what sheryl is trying to do is to get a broader conversation across america in particular. she says to usa today this morning almost no one understands that women have made no progress at the top in the last ten years. it's truf any ie of any industr government and why has the dialogue, about the public and why isn't that dialogue going every day about women have not advanced further? >> i think, you know, she writes
about this in her book, but some of the feminists that came before sheryl they might have had a reputation that didn't resonate with a lot of modern-day feministis and think that sheryl realized that there was a new set of dialogue that needed to take place about these issues that we're helping all around us. >> do you think people will see her as representative of women at the moment? >> i think that it doesn't matter if they see her as representative of women. the fact that she is in a position of power puts her, you know, makes her uniquely able to start this dialogue. >> all right, clara, we'll leave it there. thanks for your time. good to speak with you. >> clara shih joining us from austin, texas, this morning. >> when we come back, gas prices falling nearly 6 cents clocking in the first drop of 2013. plus a life and exclusive interview with blackstone's chairman and on ceo stephen
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got a got a mover in the financial space. let's send it back to kayla tashi. >> we're watching shares of citigroup hitting a new 52-week high. first thing when trading opened and trading into the negative and hovering around the flat line and an upgrade from ubs, upgrading the price target to $62 and it's near $47. ubs basically saying that headwinds from the bad bank, citi holdings is starting to fade and citi could be a dark horse playing in the recovery. >> thank you, kayla. >> still ahead, rick santelli on why regulation for too big to fail is cumbersome, that and
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take take a look at blackberry here this morning. it has been one direction and that is up pretty much the entire day and it started 3% to the upside and currently closing in on 10% to the upside. the news, of course, is that at&t is going to launch the z10 march 22nd for $199. presale's on the 12th. would that explain a 3% move? >> i knew that it was going to launch in march. it's march. >> exactly. >> there you go. >> you might layer on to that whatever rumor you choose. >> at&t, interestingly, by the way, was the first company, the first carrier to bring the black behr toe market and they're happy to bring the next revolution. >> to see t-mobile? >> yes, that's true. more carriers. we should note there is a 26% short interest in black berry is that could be a reason for this
big move. >> gas prices have fall ben 6 cents during the last two weeks and the lundburg survey putting the national average at 375 -- i beg your pardon, at 373 a gallon and it would certainly lower crude oil prices and refiners, following weeks of increases. let's head over to the nymex and jackie deangeles is there with more. good morning. >> good morning. joining me now is anthony grisanti. let's talk about these declines that we're seeing at the pump. is the crude price decline the only contributing factor. >> we got a little bit ahead of ourselves this year and usually this move is made when we move from win the tore summer gasoline and it was made earlier this year. and with them being at record prices and that's when they take a barrel of crude oil and refine it to gasoline. you'll find refiners to make as much gasoline as possible. >> you talk about the summer driving season as we hit spring now and we are ready for are that to happen, do you expect those prices to increase?
are you looking for record gas prices this summer? >> i do expect them to increase from where they are right now, but i don't expect a record this year unless we have some geopolitical issue or major refinery. >> pricewise, over $4? >> over $4 but slightly, $4.10. >> what problems could we see that could potentially throw a wrench into it? >> refinery capacity in the northeast where this contract is delivered is strained rye now. so any little issue with refineries around here will cause major problems with gasoline. >> all right. last question. when i got in this morning i saw 1 1/2% spike in the price and now seeing the price is lower this morning. any particular reason for that? >> a couple of things i researched earlier. number one, china industrial production was way down. number two is saudi arabia is producing more oil than last year at this time. >> carl, for now, send it back to you. >> thanks for that. let's get to the cme as well. rick santelli in chicago with the santelli exchange. happy monday, rick.
>> happy monday, is there such a thing as a happy monday? anyway, mondays are in addition to santelli exchange, friday, during closing bell we had a discussion and one of the guests that i was addressing the dividends question to, piling so high, can't they find something better to do with it. isn't this a major topic? the word uncertainty came out. i've been using uncertainty for years and years and years. maybe going all of the way back to things like obama care, dodd fringe. let's pick dodd frank in particular because several things have happened today that make this gel together. see the irony. one is how to shrink too big to feel banks and op-ed today in the journal and i'd like to read one little excerpt so let's put it on the screen. with the law that runs 849 pages and more than 9,000 pages of regulations written so far to implement it dodd-frank is long on process and complexity but short on results.
regulators cannot enforce rules that aren't easily understood. boy, is that sound logical? the other thing that gelled today is jeff immelt, our fearless leader of a bygone day. that just changed recently. on the big letter that he wrote to shareholders i would like to pull out one sentence. until we solve for these constraints, it is hard to see that the u.s. will return to its full growth potential. obviously they're both talking roughly about the same thing. here's my problem. where was everybody two or three or four years ago? dodd-frampg passed in 2010. mr. immelt running one of the greatest companies in the planet former ge. in terms of dodd-frank, let's look at it this way. okay? we have a diagram. the neat thing about vin diagrams is they're supposed to intersect at some point. here we have big biz.
here we have the government and here we have the federal reserve. here's my contention, is that i don't want to point fingers at anybody, but to me, the problem i see is we have a lot of photo-opes and we recognize a lot of the problems that are wrong, but nobody addresses them, okay? why doesn't big business. and this is health care as well. all of a sud dden of late, a lo of executives saying implementations are a disaster on the jobs number friday. we see the beginning of jobs splitting, unintended consequence. potentially of obama care. if you heard anybody didn't in business say it's not the uncertainty, of course it is the uncertainty. we've recognized it. 2010 passed. can't these two ever find an intersection? isn't it not about photo-opes? isn't it not getting rid of yes, sir men and getting things done? every time we see ben bernanke and fed officials go on the road, they're part of the
implementation writing the rules. why don't they speak up? why don't they shake it up a little bit? there's obviously something wrong. everybody recognizes it but more programs, less solutions, less growth. it all adds up to new math and the new math is, is that we really need a government that responds more to business and this is not about fiscal cliff and all these issues because none of them are going to be solved by interaction tax code. these are major changes and they all understand they need to be done. carl, back to you. >> oh, i like it when you get a little red faced, rick. we wake up over here. thanks, rick santelli in chicago. >> that's for sure. tweet time now. google unveiling a prototype of a smart shoe. the latest gadget can log your running time, give advice and encouragement or trash talk, whatever you want for runners. our question of the morning, what is next article of clothing google is going to hack and what will it say to you? we've got your responses next.
workout. we're asking you, what's the next article of clothe that google is going to hack and what will it tell you? r james writes, pants, that tell you calories to burn off. brian writes, google tie monitors fashion trends to automatically get wider or thinner. james writing, the google socks embedded with gps so the world can finally solve where all those missing socks actually go after doing laundry. what is up with that? >> i had hoped for better underwear jokes, i have to say. >> there were a couple. >> yes. but -- >> at family show. >> correct. >> we continue to watch blackber blackberry. talked about it during the break. short interest. >> 25%. i don't know but this is a gigantic move at session highs here. >> some rumors. i won't even repeat them. >> take out -- take out the run of the mill rumors. up by 11% here. it's worth noting, too, shares of nokia are down by 3 1/4%.. again, the numbers for market
share in china for 2012 came out. what a drop in nokia. went from 30% in 2011 to 3.7% in 2012. i've never heard of a market share drop to that extreme over the course of a single year. so we're watching some pressure there on the back of blackberry success and apple just the smart phone chatter here down by 1.4% on that downgrade today. >> finally on a day where the dow is literally as flat as a pancake. what's coming up tonight? >> we have got the investment manager over at burns seen global wealth and he's going to say why it's not too late to get into this rally. we may see a pause here. we t got the ceo of cree. over the past three months the stock is up 50%. a lot of people are wondering how can they watch up. what's the catchup trade? >> what do they do, what's cree? >> led light bulbs. the underperformer stocks at wall street love. high buy ratings, low
performance, are these your ticket to catch up on this rally you may have missed? >> see you tonight. no europe close because of the time change. >> later. you will have to stay watching cnbc the a. whole hour later. shake the halftime report. >> see you later on. if you're just joining us, here's what you missed. welcome to hour three of "squawk on the street." >> overweight equities nownd additional dollars to put to work. there's going to be better chances but, yes, if we're down 5% that's going to be one of the big entry points for the year. >> earnings aren't going to be good next quarter. it's going to be slowest for a while. so we expect the market to get smart. we expect the leaders to break out. there's been a lot of froth in this market and it's time to go to quality. >> all year i've heard that the payroll tax is going to kill us, sequester is going to kill us. i've come out here and said i'm waiting for it to kill us. in the interim, the markets
going up. i'm sure one day it will kill us. let's say we're up 12%, that's when it kills us? in the meantime that's the 12% you had to make. dell's prprivate, dell's public why does it matter? >> it doesn't matter. a lot of different things are happening and therefore you should be with us. we're here. we're not going anywhere. >> because of that fiscal drag i think you're going to see the fed stay agris v. they don't want to be pulling back on monetary stimulus at the same time the federal government is pulling back on fiscal stimulus. >> the bottom line is there's really not a lot of pricing disparity on big ticket items. it's a perception issue. they're attack thatter p exception issue with price match and you're going to see it advertised a lot more in the coming year. good morning. live here at post 59 the new york stock exchange to get the checks on the markets on monday morning. mondays have not been kind on the markets in general.
come into the week with general macro worries. bad data from china and europe here and there. dow is up less than a point. half a point, in fact. s&p is down 1 2/3s. nokia trading lower today as goldman cut the price target. repeats accelerating stock. and cutting sales estimates for the next three years driven by lower smart phone forecast. wall street icon steve schwartz man, ceo of the blackstone group joins us. we will get his latest views on the markets and what deals might be in the pipeline for the pe giant. and foursquare ceo and where he and his company got their start. we're find out what they're watching root now in tech. social media, what's next for four scare. the airline sector up an impressive, some say unbelievable 20% right now with the airline set to report a rare profit for the first quarter. which airline is the best bet for your portfolio? we will show you how to play it. first up though in his
letter to shareholders this morning, jeff immelt saying that growth will be better abroad than here at home and the company's top priority in 2013 will be growing the stock divide dividend. his confident in the strength of emerging markets. u.s. is a major place of volatili volatility, in his view. immelt citing the fiscal cliff and increased regulation among other reasons. ge plans to return a total of $18 billion to investors this year through dividend growth and stock buybacks. as ge promises to grow the dividend there might be other stocks out there that can still be bought at a discount, specifically in tech. that's right. experts say high dividend yields offer by health care and energy firms have helped these defensive sectors outperform in 2013. the s&p tech sector is the worse performing sect there year. but guess this, according to wisdom tree, technology companies are leading dividend
growth in the united states and contributing to the vast majority of increase in dividends over the last five years. just take a look at the numbers. tech firms spent $44 billion in dividends in 2012. up over 175% from the $16 billion spent in 2007. this has been the fastest growth in any sector. now, in terms of the biggest dividend payers, apple actually tops the the list in terms of payout allocating $9.9 billion on an annual basis. microsoft is second with 7.7 and intel with a $4.4 billion payout. all these stocks as well as oracle and qualcomm are underperforming the s&p 500 this year. now, while dividend payouts are up, average dividend yields for stocks on the nasdaq is still below the s&p 500 at around 1.5%. however, tech analyst at tapeka capital say tech companies have their cash and remain strong thus higher dividends are in the
cards. that's something to watch, carl. >> thank you very much. meantime, the blackstone charitable foundation is creating a launchpad for entrepreneurs. the initiative could potentially create 300 new ventures over the next five years. steve schwartz man is the share man and ceo and joining us from florida where he's laying this out. good morning to you. >> good morning to you. >> this is called launchpad. it's basically an expansion of a program you already have in place. you want to walk me through what the goal is and some metrics that will define its level of success down the road? >> well, this is our fourth launchpad and we're here in orlando today. and what we do is we provide money for students to have counseling and help to develop new companies. and we started this program in 2010 when the unemployment
situation looked pretty desperate in the united states. and we've dedicated $50 million through our blackstone foundation to help students learn how to create their own businesses and, thus far, we've had pretty good success. we're hoping down in orlando to create over the next five years about 300 businesses, start out with 100 people and build from there. >> we're looking at some video of you with senator rubio, i believe at ucf, as you rolled this out. 60,000 students having access to this. that's not small potatoes, stephen. what kind of business creation could this lead to down the road? >> well, a lot of students in today's world are basically very web savvy. those are pretty low cost type of businesses to start. and when they work, they work really well. one of the interesting things is
that this program is not restricted to business students. in fact, 80% of the students who were interested in this type of program are nonbusiness students. it's quite an interesting way to engage people with a wide range of outcomes. >> we had the head of subway, the franchise chain, on not too long ago, said it would have been hard to create that company from scratch today because of the onset of regulation and taxes. you look at immelt's letter to regulators. regulation burdening big businesses, regulations with high impact dollar on the economy. are there sense that these would be entrepreneurs are facing an up hill battle no matter how much help they get from you? >> fortunately they're young and they don't understand there's friction.
and a good idea can still overcome that type of friction. some of the regulations are needed and some are just creating difficulty for businesses who want to expand. it's an issue that the country is going to have to confront and deal with if we want to remain in the top tier of business creators. >> while i have you here. i'd love to get your crick thoughts on the market as large. we've come a long way in a very short time here. wonder if it feels a little bit top-heavy. >> well, things don't tend to happen in straight lines. one of the major issues that i think is triggering this is the energy self sufficiency that the u.s. potentially is going to be facing. everywhere i travel in the world, it's about the first thing that people want to talk about. if we can create energy in very
large amounts at some of the lowest prices in the world, it's very logical that people from outside the united states are going to start starting businesses here in the united states. in addition, there should be a dramatic increase in businesses that utilize the energy chain. and if you can foresee a world in the future with natural gas powered automobiles, there's already national gas powered public transportation, savings would be absolutely huge and that would go into consumer's pockets. and the number of changes that will occur that are quite positive for the growth of the country is a factor that americans typically don't understand or feel as much as nonamericans do looking at us. >> yeah, but in terms of relative to the stocks performance of late, do you
think that natgas, that energy phenomenon has more to do with it than, say, a tepid rebound in employment or any kind of rebound in profitability or margins? >> well, you have a few things as, i guess, have been reported on your shows before such as real strength in autos which will v. about doubled their production difference the septembers of 2009. and now you've got housing starting to go up. average house price in the last year has gone up around 9.7%. and blackstone, for example, is now the largest donor of individual houses in the united states. we've purchased about $3 billion of houses and been foreclosed and we're fixing them up. we have a large workforce of electrici electricians, carpenters, people cutting lawns. and then we're renting them to
opposed to selling them. it's a good business for us to new thing. but it's also good for america. good provide housing for those people who need it. >> finally, steve, i'm sure there's confidentiality concerns but when it comes to dell is there something you can tell people that would explain your interest in a sector that for so long has been in decline and some would say writtened off it? >> i don't think that's one of those things that one can talk about on glebl teobal televisio >> i guess you're right, it is global. steve, look forward to having you back soon. >> okeydoke. thank you. >> congratulation on launchpad, a great initiative. again, steve schwartzman with blackstone. ceo and co-founder of fourscare dennis crowley with us
on south by southwest. first, though, rick santelli is going to talk some grains a little bit later. rick? >> traders are interesting folks. all right. grains, it's all about grains. right now i look in the corn room and i see corns over $7. it really has been an arranged. i look at soybeans, best level since november. they're above 15. but i look at wheat, it's going straight down. we're going to try to decipher what all of this may mean for you, what it may mean for commodities and what it may mean for food prices but that's in ten minutes.
welcome back to cnbc. the market flash desk. watching shares of gwen worth. stock up by getter than 6%. it's still currently trading at half its book value but for that reason, carl, bar wrens in an article over the weekend said the stock could double. of course that would still mean it would only be trading at one times book value but that would be a big gain for the stock. carl, back to you. >> thank you. south by southwest being called a launching pad for tech start-ups and apps. especially true for foursquare which lunched in 2009. jul jul julia is live. >> dennis crowley, co-founder and ceo of foursquare. thanks for talking to us today. obviously foursquare launched here in 2009. you made a number of big
announcements here. how are you making a big splash this year? >> this year it's less about product launches and more about coming down her and con necking with the people who love the product and being able to tell the next chapter of the story. >> you recently expanded your credit cards from am members and visa and mastercard. what does it mean for your users and foursquare's revenue and profits? >> one of the things we hear is that they love using foursquare to save money and one of the best ways to do that is with the credit card deals. we've been doing this be american express and now you is sync your mastercard with it and you at the time a discount when you swipe. >> how are you seeing people use them? uptick in user numbers and foursquare's profits? >> uptick in the number of specials we can run and how easy they are for folks to redeem. over time as you see more specials in the system, you see more activity from users and hear more chatter about how much they're enjoying the service. >> another big change is new ios
app seems to be competing with yelp head-on. how are you going to take some of yelp's market share? >> people are figuring out we're really good at personalized local search. and so local search has been a one-size fits all type of game for a long time, where if all of us search for the same thing we all get the same results. trying to change that. everyone should get different searches depends on who you are and who your friends are and what they've done and what you've done. we're getting really good at doing that. users are starting to see it. >> does that mean you're ramp b up your revenues and going public soon? >> it means that nothing about going public any time soon. a lot of work to do before then. we are all reaching out and trying to talk to the same merchants. developing tools on a platform that enables them to draw best customers? >> out here on south by southwe southwest, what are the trends that you see here? >> it's interesting. it's different every year. you see a lot of people experimenting with apps and experimenting with mobile space.
there hasn't ban really big breakout app in a couple of years but interesting chatter what's going on here in the hallways and a lot of it's about things that help track your health and fitness and nike fuel and band and 3d printing and hardware. it's interesting to get a feel for what's going on. >> does seem more gadget oriented this year. carl? >> dennis, we keep getting told that start-ups, especially successful ones like yours, are going to want to stay private longer. i know julia just touched on the notion of going public. second market out there, the nasdaq now has a joint venture that allows shares to trade privately. are you -- can you say you would be willing to maybe stay private longer than you previously thought? >> yeah, to be honest, i not something that we think a lot about. we have so much work to do as a company with the user community, the merchant community. it's something that we may have to address later on but not something we think a lot about right now. >> julia? >> well, so, if you're not thinking about that now, what is
your main focus? do you have a hard time converting advertisers to understand the value of foursquare? >> main focus is growth. four years old. 30 million people using foursquare. a million on the platform. we're in this league where we're competing against the googles and facebooks of the world. we just have to get bigger. >> so how will you do that? what really distinguishes foursquare and help you compete went you're facing the giants? >> building great products. like the american express and visa deals. if you can build tools for folks to allow them to save money through their mobile phones, they love that stuff. connect their friends and discover things nearby, they love that. the better we do that the greater community is. >> community of 30 million strong right now. dennis crowley, ceo of foursquare, co-founder, thank you for talking to us. >> thanks, julia. airline tons rise this year set to report a rare profit for the first quarter which is generally a tough quarter for that sector. should you buy in?
let's check in with rick santelli with a look at grains after friday's usda supply outlook. rick? >> you watched this one? yes. you know a lot of people don't pay a whole lot of attention to the usda reports and then we get into spring and closer to spring planting. but don't do it. stan will tell us why. welcome, stan. >> thank you, rick. >> when i look at the three grain complexes, corn, soybeans, and wheat, let's put our trader's hat on and go through each one and tell me your thoughts. starting out with corn. >> the corn market is a tale of two different markets. people have said, the old crop corn which appears to be almost unsolvably tight. and then the new crop corn which we'll offer the potential for stocks building for the first time in several years. it's hard for me to imagine that old crop corn has much downside, with ethanol margins as rich as they are, animal numbers, the
usda pointed out, as big as they are. at this point in time doesn't appear the new crop would have tremendous upside with the acreage expansion and with the soil moisture being healed from last summer's drought. >> when i look at it, depending on what contract you're looking at, we're roughly in the $7 camp. you don't see a huge amount of upside. in the early '90s i traded a lot of corn around always able to bye $2.50 calls because it was always lower. we come a long way. >> where was crude oil? >> exactly. good point. okay. let's go with soybeans. >> the soybean market is looking at perhaps unsolvably oh low. >> stop. when we talk about tight old crop, inventory of the crop in question. soybeans already grown. new crop is what we're going to plant? >> 2012, new crop would be the crop that would start to be planted in about a month and run into 2014. the chinese have continued to
consume tremendous amounts of soybeans because their margins have gotten better. difficult to shipping the beans out of brazil even though brazil has a pretty ro busz bean crop because of logistics issues, some labor, some weather reled, some sbli due to the size of lineup down in brazil. and so as the weeks have gone by, the export program here has exceeded what many analysts have thought and at this point in time, between current exports and the current crush rate, the u.s. is looking at a soybean of potentially under 100 million bush shells. >> which is light. >> light. ratio would be almost unprecedent sdplunpres de unprecede unprecedented. >> wheat, unsus set i believe to light snow cover meaning price will go up. it's basically been going down for quite a while. what's going on with wheat, winter wheat in particular? >> we produce less than 15% of the world's wheat. so from a supply perspective if wheat is going to run it's going to run when there are weather problems from a number of
different origins, particularly the black sea. and australia. and those countries are not had much in the way of issue this year. the u.s. has issue with a very dry profile in the western half of the wheat belt which has slowly been helped. there hasn't been any winter kill here. wheat demand has picked up because wheat has gotten so cheap to corn. at this point in time it's not clear just how tight we balance that. >> quickly, one thing that consumers may not pay attention to with grains is they need animals and everybody likes to barbecue. there was a lot of kills last season because of the drought and expensive feed prices. do you see that loosening up a bit or do we have to wait for next year for a big drought? >> i suspect if you're looking at beef prices any real relief in beef prices is probably down 12s down the road because of the length of the cattle cycle. >> stan, thank you. carl, back to you. >> rick, talk to you in a little bit. when we come back, get advice on navigating this market from a man who helps oversee
actually an hour different. it will happen at 12:30 eastern time until tend of march. so when it returns, simon will be here to give us the european close. in the meantime, 8:30 on the west coast, shares of apple moving lower. crediting agri lowering it. ups on the stocks hitting some new 52-week highs. up 15% so far this year. around europe's airbus says it's aiming to sell at least 200 current generation a320 passenger sdwrets thjets this y. hey, bertha. >> carl, one of the things talking to folks they're really quite impressed by the resilience of this market. we got that data overnight be china that was disappointing in terms of industrial production coming in at 9.9%. we should all have such a high class problem with not being at 10% but being at 9.9%. little disappointing. none the less, the market is holding in. a lot of folks we're talking to
are saying we are going to hit that all-time high which would put up above $16.65. a lot us think it will hold in. art hogan says if you look at the pe for the s&p right now, the price earnings, it's at around 14 times which is really traditionally where it hangs in. 14 or 15. so you can't really argue right now that it's overbout. another thing that's interesting is that it could do it without the help of apple which would also underscore this is a broader-based market rally. one of the things that's interesting is we've seen a lot of asset reallocation over the past few weeks. we've got the ten year today continuing to move. but bond funds are fractionally higher after seeing five days of declines last week. so maybe folks are starting to think about staying in there. meantime, we've seen some reallocation out of commodities, the gld, the gold fund. last month saw record outflows. we've also seen commodities pull back in terms of trading.
the "wall street journal," this is a big talker among traders today saying the big banks which had their big commodities operations have really pulled back in part because of regulations, in part because it's tougher because they're not moving higher. and that has also depressed volumes. so that's one of the head winds in terms of commodities. in terms of some of the other high financials, a number of them at highs today. genworth and s&p 500 health care sector today at all-time highs with j and j among those at historic highs along with gil d gilead. but we have the providers looking strong. that index as well at an all-time high today. swan saying that we are seeing a little bit of a pump up when it comes to hospital in-patient intake and the fact that we don't get the sequester stuff hitting until april would likely be pretty good for the first quarter numbers. back to you. >> thanks, bertha. want to get a check on commodities, too. jacqui at the nymex for us.
>> hi, carl, looking at the industry commodities this morning. lower as a group. the risk appetite waning a little bit after china. china, the most intensive commodity user. any time we get negative news out of china we're going to see this group move around a little bit. goldman sachs saying it's over done. they're out with a note putting a buy on come 340dities saying in this space what they're looking at, they're preferring petroleum, preferring copper right now, especially. now, a little bit of a different perspective when looking at the commitment of traders report. according to the latest cftc data hedge funds cutting their bets on commodity rally to a four-year low. in terms of supplies, surplus that they're watching from in everything, from coffee to natural gas. but speculators reducing their net long positions and that's really important here. in 18 futures and options by 9%. and, in fact, that's the lower that we've seen since march of 2009. taking a quick check on energy prices seeing wti oil creeping
down. i do want to point out gold is holding steady slightly higher above the flat line this morning. >> thanks so much. market fighting to keep the winning streak going. next guest say it's to be expected but does remain constructive. he oversees $425 billion. welcome back. >> thank you. >> i want to pin you down on this near-term downside risk. i mean, it is in the near term. but how much risk would you say there is, not too far out? >> look, it always difficult to say the market has had a strong run. we have had extraordinarily low levels of volatility. so simply would not take a great deal in terms of incremental data to drive a downside. and that's not unusual. however, between now and the end of the year, we do see the expect taeations being still qu low and continue to be constructive in the market. >> and constructive why? i mean, you could point to a
number of things that are appearing to work or start working. what's in the top of the list? >> yeah. and so there are a few things that i think are positive. the first and the foremost, expectations are embodied in terms of consensus estimates. still quite low. it would not quick a strong economic growth to get the companies to beat numbers as we move into the second half of the year. the second one b is we're seeing the reprising of assets as we see it pick up in m and a activity. something missing over the last four years. those two things are fairly positive over the market. >> you point to shale. steve schwartzman suggested if we get near energy independence we're there's going to be a lot of people automatic over the world that will want to start their business here. >> every bull market needs a dram dr dream. i'm probably not as optimistic. having said that, based on the analysis we've done we do think
it provides incremental 50 to 60 basis points to economic growth and maybe half of that in terms of employment growth. so it's clearly a positive. it's moving in right direction. i'm not sure it's a true growth theme in itself. >> right. you say -- you're not sure you would chase the shale play as a pure stock play, right? >> i'm very much concerned with valuatio valuations. if the valuations get out of hand as if they reflect a pure growth status of these companies, i would tend to pull back. likewise, if oil drops below the marginal cost of production which for wtis and low 90s, i would become much more positive on energy. but with oil above marginal cost above that, i'm neutral. >> one of the things you would overweight, tech. what would lead you to it, especially since it hasn't done as well as some had hoped this year if you include apple. >> absolutely.
two herrareas that i find interesting. cyclical, semiconductor. you're nearing the end of inventory correction. expectations for this year are extremely low. and valuation particularly for semi cap are near all-time troughs. so my view is you should see some upside. on the communications side, it's the 4g buildout as well as the data center or cloud side. >> all right. you say underweight commodities, which is sort of the inverse of what some people have said to us, vadim. obviously we know some commods have not kept pace. why don't you agree? >> you know, that's a great question. if you look at commodity stocks they're actually trading pretty close to all-time trough value e -- valuation and cash flow. the bulls are sort of right in the sense they're quite cheap and they have not kept up the pace. the problem i have is that i think commodities could make for
an attractive trade over the next couple of months, maybe three months. my problem is they're facing a headwind from ten years of aggressive investment in capital. so you see very strong inflation in their cost of production. so i don't think their margins are sustainable over the next three to five years. as trade, commodity stocks are good. as an investment, i'm not as interested. >> finally, vadim, one theory that's gone around this desk, if you get more retail participation or even institutional participation this year, the buybacks have happened with such force that there won't be enough to buy and you do see a real upward squeeze as we get into the second half. is that likely in your view? >> it's interesting since we have seen a significant parts of the market bet bought back by corporations or other market participants in the mid to late 80s. it did have a positive impact in the market.
contributo contributory factor. i do think it's certainly helping the market. when it comes to this massive shift of capital from fixed income to equities, i don't see as much evidence as maybe some of the others. when i look at how much equities comprise of a total net worth, it's not so dramatically below trend as to create this wave of investment that some people see. >> it's a notion that is still creates some controversy. that's for sure. vadim, always good to see you. >> it's a pleasure. thank you. send it back to kayla here at headquarters to get a quick market flash. >> watching shares of valero energy. worst performing on s&p 500. decent volume, two-thirds. a week ago we did see the ceo selling a bunch of shares and it has been trading down throughout the week. today it appears it's trading lower in sympathy with the entire energy complex. carl? >> interesting, thank you. if you fly a lot you know the planes are crowded and there are fewer flights to choose
calls for correction are growing louder. barclays revealed the biggest risk to the rally and what to do if one happens. time to buy unloved tech? find out if the names that have lagged are ready to rally. can urban outfitters big run continue? one says yes, another says no. you know what that means, real money, real debate, carl, at the top of the hour in 15 minutes. >> i smell fireworks. if you have flown this year you probably noticed your flights are more crowded. there are definitely fewer flights to choose choofrom. airline are doing something very rare, reporting higher profit for the first quarter, which has been a bit of a cruise bl for them. phil lebeau has details on that. hi, phil. >> this is very unusual, carl, because historically the airlines have always struggled in the fours quarter. last week delta said they expect to turn a profit in the first quarter. first time since year 2000. look at why. when you look at february, and revenue per available seat mile, what's known as prasm, is all
positive. why? a couple of factors in favor of the airlines. first of all, tighter capacity because the airlines have stripped out a number of larger airplanes and replaced them are regional jets. higher percentage of seats being filled and the airfares have been holding steady. it hiked this year. haven't seen any airfare sales. on the fuel side, the cost side of the equation, the airlines are benefiting from basically moderate jet fuel prices. gone up a little bit but haven't been spiking as many have feared and the fuel surcharges. remember those put in place last year? guess what, they're still in place. airlines are benefiting there. that's when you look at the airline index, it has been off to the races over the last six months. last week a number of the major carriers up between 5% and 13%. that's why today there's some profit taking going on here, with the exception of delta. carl, i've talked with a number of people who have said, listen, the airlines might be changing the old idea that you invest in
them for the shert short term, north for the long term. jim cramer among many out there saying, you know what, maybe it's time to change the idea you can invest in the airlines for a longer period of time. >> even cramer admits it was a bit of a surprising play for him to finally recommend that amr play. phil, thanks so much. so what is the best way to translate that positive news of airlines into your portfolio? here's to break it down, a man who knows airlines backwards and forward, airline analyst at imperial capital. bob, welcome back. >> good to be here. >> is the game really different here? >> phil hit i right on the head. we're managing business differently. oil is down. i think, you know, people are not worrying around about market share. i think the concept of an american u.s. air merger only makes things better. >> have we reached a point where con sal dags, is that a reasonable level, can we have most of the flights in this company divided into four players and everyone lives happily? >> i think people kind of figured out who lives where, who does what, and, you know, i
think we've seen all the real consolidation we're going to see. but it looks like it's going work. >> people wonder, bob, if the day ever returns where you and i can take a couple of planes out of the desert and start our own airline. and start pinpointing markets where we undercut everybody on price. certainly that was the problem all through the '90s. it's hard to imagine that risk has gone away forever. >> well, i suppose you could see some of that. we have a couple of guys who have that approach to life. alee gent and spirit airlines are both doing that in their own way. but the way they make it work is the product is so different than everybody else, that, you know, the rest of the guys are leaving them alone. i think it's a limited product, has a limited kind of appeal to certain kinds of customers. in terms of being able to go out and start a new airline with a traditional product the way people have done over the last 20 years, i think those days are probably gone. >> so let's walk through some of your favorites. majors, regionals, individual names you like? >> i think i like the majors.
that's where the most people can make the most money over time. you know, if i had to pick only one, probably u.s. air at this point, believe it or not. i think that that's -- that story as much as it's gone on, that story has really not been fully understood, i think. and there's a lot more to come in terms of the beauty of putting that company together with american airlines. it's more than maybe what most people are thinking about. >> yeah. we don't mean to joke about it because i mean, it's a fine airline but road structure, weather challenges, the consolidation challenges they've had for the past 30 years? >> it's been a tough time. but one of the interesting things is the management team that runs u.s. air has actually had among the best margins in the industry even with a root structure that's dominated by philadelphia and charlotte. nothing wrong with those cities but they're not the glamorous kind of hubs that most people would think about. but they've done it with that. and so you turn those people loose with the american root structure, i think you have an interesting kind of situation. >> finally, there's delta which
is not only paid back debt, bob, but they've gone vertical in trying to protect themselves from oil risk. have they set the agenda in terms of financial innovation? >> i think they've clearly led the way in terms of the way to manage the root network among other things. and people talk about the refinery there and the refinery is an interesting kind of thing. i think people make way too much of it, you know. if it works, it will help them. if it doesn't work, it's not going to hurt them that much. i think the real beauty is the way they've dealt with their network and put a limit on flying. if it doesn't work, they don't fly it. very quick to pull out of things that don't work. >> yeah. we'll see what happens in the summer when fares get a little more competitive or t at least a lot of consumers hope so. bob, thanks again. >> good to be here. imagine coming home every day to this, a 30,000-square-foot mansion, 11 bedrooms and indoor basketball court. one of the weiwealthiest zip co country.
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mansion that is so big it takes more than an hour to walk through the entire house. our robert frank explains in today's "million dollar minute". >> reporter: imagine coming home every day to this -- 30,000 square foot, one of the most luxurious homes in one of the wealthiest zip codes in america. welcome to alpine, new jersey, and a $49 million estate. >> the stone mansion was brilliantly designed. it truly achieves a new standard of excellence. >> reporter: tucked behind guarded gates is the 42-room stone mansion. 11 bedrooms, 19 bathrooms, an indoor basketball court and four kitchens. with a $75,000 stove and drawers that become refrigerators. trim work painted in 24 karat gold and a pair of chandeliers
worth more than $250,000. >> over $5 million in landscape. >> reporter: it was also the site of a mega party thrown by sean parker. >> robert frank joins us with more now. incredible video. i can't imagine what it's like being in it. do we know who the seller is? >> reporter: can't really say who the seller is. but this home has been on the market for a few years. they took off $19 million. it's kind of the downton abbey of alpine. >> three years to build this thing? >> reporter: yeah, all the panelling, the metal detail, the gold leaf. so much was put into this house. again, the price tag, $49 million, something you would associate normally with manhattan, the most expensive co-op ever sold in manhattan is over $50 million.
this is a big jump in price but a lot went into this house. >> we've talked a lot about the market in manhattan itself. would they be targeting european oligarchs, in this case? >> reporter: there was a rumor that oprah looked at this house early on. she denied that rumor. we're told it's a lot of very wealthy russians and asians now looking at this house. not so many americans, reflective of what's happening at the high end throughout the country, not just in new york, new jersey, but also in miami, los angeles. >> having covered wealth through a couple of different economic cycles, i'm wondering if this feels to you like the sign of something that -- i don't know -- resembles a top, resembles irrational exuberance? >> reporter: the prices would suggest a little bit of a bubble. $49 million for a home in new jersey. nothing has ever approached that. but the choice for the very
wealthy is where to put their money right now. and outside of stock, real estate is the safest, most secure, best investment. so the macro environment would suggest we still have room to go on the upside. >> good luck to the realtor who has to show that thing. definitely burn some calories. thanks, robert. keep the tweets coming. google's unveiling a prototype of a smart shoe. this gadget can log your running time, encourage you, give advice. so we're asking, what's the next article of clothing that google should hack and what will it say to you? tweet us, @squawkstreet. we'll get your answers after a break. i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to. plus, when i call my local scottrade office, i can talk to someone who knows how i trade. because i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade.
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