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tv   Squawk on the Street  CNBC  March 20, 2013 9:00am-12:00pm EDT

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some new members of the team will be introduced. the chairman emeritus will distribute his usual wisdom. and you? well, you're the chief life officer. you just need the right professional to help you take charge. ♪ stock of the day, fedex shares trading lower so far this morning. the company's quarterly results and guidance perhaps a little bit disappointing. let's get back to our guest host steve romack for the last words.
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you like aon. it's one of the larger positions. >> only 20% comes from the u.s. of the revenue -- is that what you said? >> 20% of the companies that we hold. 20% are domiciled in the u.s. and 50% come from overseas and a lot of the things we're finding lately have been a special situation. we were long renault and short nissan because we were able to create the stub at a negative $5 billion euro valuation with the company that has great balance sheet and cash flowing positive and we're long vodafone and short verizon because vodafone owns 45% of verizon wireless and verizon owns 55%. we were creating the stub at a pretty inexpensive price. >> anything else that you like? >> you don't like the consumer. >> we're cautious. we're scared of how the government keeps putting money in people's market.
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the government trumped 2.4 million jobs and they didn't talk about the 1.9 million people on food stamps and snap program. so we're just very, very cautious. >> you're a new york, l.a. california guy. >> i'm not sure where this is going. >> you're not drinking the kool-aid on the big government? >> no. >> steve, thank you for being here. >> it's been a lot of fun. >> thank you. make sure you join us tomorrow. "squawk on the street" begins right now. ♪ ♪ ♪ good wednesday morning. welcome to "squawk on the street." i'm melissa lee with jim kramer and scott wapner. carl quintanilla and david faber have the week off. let's take a look at how we are setting up in the united states. we are looking at a strong open higher and the dow up at 79 points and yesterday we did see signs of life and the dow surging late in the session and the dow looking to snap that three-day losing streak.
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as for europe, both stocks and the euro seeing some relief. we do have a bounce here, a nice one, in fact, in italy as well as in spain as the ecb prepares to give cyprus more liquidity and it buys them more time to come up with some sort of solution. overnight in asia, the highlight here is the move in shanghai. tom demark forecasting a polled rise by september. 28% move, in fact. also, of course, we're getting pmis overnight tonight. a road map starts with fedex. the problem here, international weakness and customers opting for cheaper and slowing shipping options and will it be a bernanke bounce or buzz kill? we'll be focused on the statement and the news conference changes to language and the new fed forecast for the economy. and the stocks we're focused on this morning, blackberry getting an upgrade at morgan stanley and a note titled why it won't go down and it gets into the best
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buy bull camp, and calling it the best near-term idea in the sector. let's get straight to fedex. the package delivery company says it earned $1.23 a share in the fiscal third quarter and below wall street forecasts. fedex says the customers were choosing slower transit services. this does happen, of course, after a massive run in the transports. >> one of the things that amazes me about fedex is they keep missing and they get loved a few days later. missed and gets loved. it's still regarded as being a profit machine. they have this restructuring that people like very much. people feel it's only a matter of time before someone steps up to the more expensive freight. to me, my charitable trust owns ups. ups has the expectations lower. scott davis always says negative things. >> melissa hit the nail on the
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head. the stock had a big run and the two guys were going head to head over what was in store for the company going forward and that was going to run out and you can only go so far and once that runs out where do you go from there? was there someone who won? >> yeah, the bull one. >> i'm throwing that out right now. >> i'm appealing it and i'm telling that guy, i'm sending it back. >> the viewer said the bull was wrong. >> i'm going to tell the bull today. >> yes. >> he's full of bull. >> i think the bull knows with the stock down. >> the bull lost for now. >> the question is at this point in these particular transport, the fedex versus the ups do you favor one or the other because ups will have more european exposure and fedex will have more markets exposure. >> is this not the place to be at this point? >> i think ups blew it. i'm going to say this is a great
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company. they took their eye off the bull when they were doing the explosive dynamite acme deal that fell through. since then, they're getting their act together and they like to carp about the political situation. fedex gets so loved and so hated and fed sex is a bipolar stock. >> was that a reference to weil e. coyote. >> they always have the same way, too. >> what are we going do today, pinky? >> we'll take over the world. >> someone always ends up with an anvil in their head after the end of those. >> they were addressing a problem in asia and right sizing the company according to what it's seeing in terms of demand. >> this asia story is so funny. i mean, oftentimes that i've discovered during the period of loss is the facts just don't fit. you come in with a negative story about china and it explodes the upside because a
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technician will go and there will be a meeting and the party comes back and they say we're changing gdp and going from 8% to 6%. there isn't any aspect of life that is not controlled by this party. it's not the democrats and republicans. so i think that this new regime is going to -- this is a positive sign and i think the regime will turn things and make things better and that's why fedex three weeks from now -- not be high arer, but back to where it was before it reported. >> wow! >> all right. well, we're -- we're all waiting for the fed today, obviously. will wall street like the message they get this afternoon from ben bernanke? fed policymakers concluding their latest two-day meeting just hours from now and under the new schedule the post-meeting policy statement will be issued around 2:00 p.m. eastern time and that will be followed by chairman bernanke's news conference a half hour later. it's cnbc's special coverage of the fed decision on interest rates begins at 1:50 p.m. eastern and that, jim, is the
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story of the day. forget cyprus for now, for a moment. >> right. >> if the fed will decide today whether this rally goes higher and takes that next leg or not, right? >> i think the fed got kind of unlucky in terms of events in that we've had this amazing flight callity on vequality on . it's obvious that interest rates are going higher. he's helpless of doing anything about it and he's got to find a way, and then we've had this incredible rally in treasurys and interest rates going down because of cyprus. what does he do? did he expect that pitch? this is a three-pointer by the bond guys that swooshed. >> the good thing about bernanke about what he's done so far is even if he gets a pitch he doesn't expect he's able to adjust and hit it. >> very true. >> and today, what happens if they deliver a message that says the economy is, in fact,
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improving if they notch up the statement from an economic standpoint and they give the nod that stimulus is going to continue like everybody knows it is, anyway. >> you havy is quester and fall back on that. you have the idea that europe is much weaker than we thought, china -- he's got a lot of cover. oil's come down in the last few weeks and brent's been switching with wti. we've had a lot of calls that commodity pricing for food is coming down. he has a lot oflyway. the futures blasted the moment he opened his mouth to color it negative. an hour and a half later the futures guys are exhausted and people like it. >> to scott's points, though, in terms of market expectation out of the fed, the fed is expected to increase its gdp forecast because that's what we've seen with the retail sales numbers. the market does or consensus believes there will be largely no change in the language. >> right. >> there are all these consensus expectations. if ben bernanke delivers one right down the center in
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expectations will that be a sell the news sort of event? >> the quarter, to do the whole clock of the day. at quarter to 4:00 people will say that was the fed, that's done and now the banks are going to open in cyprus and we have to refocus on cyprus. so i think you have to thread the needle here today. things are good and people don't want good. good, bad and there are a lot of shows and at the same time, at the end of the day there will be a faction that says cyprus is back on the radar screen now that we're finished with the fed and we'll color things negative. >> it is amazing that over the next couple of days it is ben bernanke and vladimir putin who could determine the direction of where the markets go. >> stick with the theme about the bullfight. ? isn't it the perfect scenario for the market if you're a bull of the stock market, if they talked that the economy is improving, but they're going to stay in the game. what else do you want at this point.
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>> i want the futures down ahead of the meeting and i don't like this rant. >> it feels like a sell the news kind of event going in with the dow futures up 79 and at this moment in time. do you think the people who told us that the market is down 2% to 3% off of cyprus on sunday? are they covering here? remember the panic that -- first thing i did was i googled cyprus because, hey, i haven't looked at that at world war ii since churchill saw it was a key strategic area. the germans don't like the russians. remember that? next thing i know, this is the hottest area of the world. >> what about the people that were -- three weeks ago or so that went to all cash? yesterday they were probably, like, i told you that was a great move and now they're, like, uh-oh! >> in april until october 3rd the main reason was dexia. the problems with dexia. i googled dexia. i think now it's a supplement
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being recalled by pnc. >> and then you have a 50-day suspension and you didn't have the twist of the nasdaq and there's a lot oflyway that that doesn't happen and then the sell the news and we're kind of unchanged. >> right. >> it will be interesting to see, and if someone were to ask ben bernanke about the situation in europe and the situation in cyprus and whether or not that is exacerbating the overall situation in europe and how he addresses the fact, that if the situation is worsening, will he lore the threshold for unemployment? will he open the door to longer qe? >> he's very good at chatting now. remember when he crushed the
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senators? that was amazing and i thought it was like a princeton dinner club. no, man, he was mama jamaa. i do believe that in the end he will split it. heel be wi he will be wise and we'll stop thinking about him for a couple of days. >> and we'll think about putin. >> is putin long? >> those guys play it. >> he's always long. >> he's always long. >> he is always long. >> he can make it work. >> remember, there is a subtext here. why? the russian oligarchs like to throw their money in cyprus because they get a 5% rate and better than being confiscated by the russians and they want the cyprus feel to not go to the turks and they want to keep the stranglehold on europe and there's food for thought. >> someone made the point, take a look at how much the oligarchs or whoever money launders is made on the percent keeping their money in cyprus.
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my percent or so on interest, to have money sitting there in an account, and so a 10% one-time hit, nothing. they still made money in the end. >> just the kind of people that make nothing like the citizens of cyprus who had their money in. >> those are the people who get hurt. >> there's another aspect of the oligarchs. the tension. we all think that putin and the oligarchs together. we called up the top ten oligarchs and you have to give a billion to the olympics. there is a tension. does putin bail out these people that he's trying to shake down? this is not an easy question. between the kremlin and the great wall, man, this is hard. it's like the game of diplomacy. that guy died recently and he seemed like a great man. >> let's talk blackberry. morgan stanley upgrading it from an overweight to underweight. raising it to 10.
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they see it lifting margins even assuming a lower service on the product. sales are now up more than 33% so far this year. this is like the little engine that could. it is amazing what the the stock has done. and e hud, sorry if i mispronounced your name, ph.d. in eight pages it's quicker to show why it won't go down, upgrading to overweight. we are in an odd moment in this market. >> if you can come up with a note like that. the stocks are not going down so i have to recommend it. >> best buy, this is a brand new theme. the stock's going in. i like it. >> stock's going up, i like it. >> very unheroic assumptions on numbers is what mr. gelblum is talking about. >> forgive me. got to give credit where credit is due. >> i was going to say, that's a lot of indication. >> he's got a doctorate in
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blashi blackberry. >> magna cum laude in blackberry. >> i think that this is one of those amazing pieces that he does say something interesting. >> our new sum of the parts when they ignore the way to be able to recommend something. assume zero value for the device biz. some of the parts, unless someone takes it over, the sum of the parts tends not to be much of anything, but it is sure good to have something to say. >> out of that notion, a signing of zero for the device. they also assigned upside to the service because that cash is no longer going to be burned by the device business which had been the assumption going in. now the services will actually contribute and not be burned up by a failing device. >> that restructuring mattered. it did matter. that company was run in a works progress administration for canada and now they turned a lot
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of profit. i also love a backhanded slam that the windows -- windows 8 not coming together. windows -- the nokia phone. >> yeah. >> blackberry, it's not as bad as it used to be. buy. how's that? >> that works. >> not bad is the new good. >> i like that. >> that's got gravitas. >> it's the biggest week for ipos so far this year including one for a technology firm going public today. we'll talk to the model n. also samsung is launching a new product today and it's not a smartphone. we'll talk exclusively with samsung electronics america president tim baxter about what his company is unveiling and taking another look at the futures. it looks like it will be a strong open out of the gates today. the dow with an implied open plus 70 with the nasdaq following suit. more "squawk on the street" live at post 9 on the nyse when we come back.
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it's wall street firm is jumping on the best buy bandwagon. credit suisse overweight with a $30 price target and the firm calling best buy its best near-term idea expressing confidence in its management's ability to turn the company around. credit suisse is saying it is upbeat about the best buy earnings prospects. the stock is now up almost 90% so far this year. gary balter is the analyst. jim, who i know you know well.
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>> yes. >> i love the note this morning more than anything. >> i mean, he's quoting bob seeger saying i know it's late. i know you're weary. a lot of people have upgraded the stock. >> this is a night move upgrade. >> it is. but we think more of let's make it last, let's find a way. so i was thinking of seger, but this is a company that's still going against the wind. you know what i wind? >> i was going do pete seger who really wanted to date me. he's calling it a frank blake moment. i'd like to say, gary balter when blockbuster video would go to 18 cents and it exceeded 100. the management is pretty horrible and he didn't know how to install a tv. this is a -- look, he had to start coverage and who knows when he would be able to recommend it earlier, but it is a great piece. >> it is a great piece. do you agree the comparison
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between jolie and frank blake because those are big shoes to fill. frank blake, a doctorate in law. frank blake is generous. there will never be another frank blake. >> i didn't like it either. i didn't believe it. all of the other parts of the argument i may be able to buy, but that comparison is a hard one, i think. >> although, who knew exactly what frank blake was going do when he took the gig at home depot, right? >> that's true. >> if you compare it to -- it's an early frank blake reference. it's not saying that this guy is frank blake right now. >> he's geek squad and they'll integrate it correctly. this is not angelina jolie we're talking about. another jolie. you're probably thinking frank blake and jolie. >> if it was angelina jolie i'd say frank blake is in trouble, right? >> i would say angelina is in trouble. >> on sunday, i thought miley
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cyrus was in trouble. cyprus! >> all right. we are watching best buy shares trade higher in the pre-market. meantime, the bulls are looking to regain their mojo. cramer will show you how to get along for the ride. once again, we're looking to snap the three-day losing streak on the s&p 500 adding nine points at the open. >> there's my seger.
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♪ ♪ all right. a good two in there. six minutes before the opening bell. time now for cramer's "mad dash" ahead of the market open. >> i don't want to take this to a desperate place because i'm kind of in love with this market at the moment. >> nice reference. >> done your way. >> i'm right there with you. >> tote low. caterpillar global sales, merrill lynch that just came out, i call that negative. north american down 12%. here's the issue here, we have to keep dealing with the fact, deere downgraded and i was talktoto melissa. deere down yesterday and down again today and it's difficult to mount a rally, a serious long-term rally when caterpillar is not good and fedex isn't good and deere's not good even if best buy and blackberry are not as bad as they used to be. >> those aren't enough to raise the market. let's understand that the
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financials may have gone down too precipitously on cyprus, but there is a backdrop of industrials i call nsh, not so hot. >> second, arcp. talk to me. >> i had shorts. this is a hostile bid. the real estate investment group has lacked consolidation for a long time. i had them on last week. a nice 6.5% yield. he gets the deal and the yield will go higher, if he doesn't, it's still a great stock and i know you're a big head & shoulders fan. boom. okay. so i like the real estate investment trust sector and it does well because it's had a cyprus. >> you're not saying there's smog my shoulder. >> you will switch with me after the show. >> a technology firm whose customers include merck and dell is jumping into the ipo waters. model n is ring the opening bell to celebrate its wall street debut.
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we'll bring you the company's opening trade followed by a live interview with the ceo. skwt squawk on the street" is coming right back. ♪
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lookake's take's look at the crowd surrounding post 9 this morning and it is rare to see all of these people and there is one reason you're seeing all of these people and it is because of model. one of the most anticipated ipos of the week. the week being the busiest week for ipos so far this year. we're a quarter in and also this huge bull run and a lot of people and companies want to get out of the gate and raise their money. we'll talk to the ceo of model n right after the bell is rung and after the first trade is exec e executed and we have about a minute to go before the opening bell on wall street. we watch a lot of things and not just stocks and we're seeing in wti and brent. copper also joining us. the buyer bounces and anything can bounce. ipo week is good. brunswick study of m & a, highest activity in a long time. m & a ipo may be a commodity lift and bad day to be sure. >> even though with the
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caterpillar news and even with the fedex news. >> you have to pick your spots. deere's had problems, parker hasn't, boeing hasn't and the stock is mixed. [ bell ] >>. >> take a look at how this s&p real time exchange is mostly in the green as we mentioned in the big board, celebrating its ipo, model n, for life sciences and technology sector and we'll speak to the ceo in just a few minutes. the health care products for dental offices celebrating world oral health day. happy oral health day to everybody. >> that's a hot stock. it's been a hot stock for many years sxhi the company on there. terrific. bed bath, playing off of williams sonoma. >> it was really good. >> how about this? domestic home building of which caterpillar is not involved as
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much as commercial real estate continues to soar and what an interview this morning with laura alburn's stock from williams sonoma. >> they're smoking. it's the online division that's smoke. online saw 19% increase. >> they've got a lot of brands and people forget the brands. the brands, brands, brand, remember that from a couple of years ago? less discounting and people willing to pay higher dollar prices for their items and look, williams sonoma is not cheap. the crucial leg thing. the meatball grillers like $29.99. >> why can't you use a regular griller? >> they have stuff in there? >> why not a george foreman joker. >> i like grill marcos my meatball. this is a market where if you pick is right, it's domestic security, you're doing quite well today, right? i'm looking at it.
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>> tack a look at the financials as the problems in cyprus can continue. >> bank of america stayed strong throughout the session yesterday and it hit a new 52-week high, if not a longer high in terms of a multi-year high, but today also making another move towards that 52-week high of 1294. so we're approaching that. >> that is anything real estate. i'm looking at rating group that does this mortgage insurance, red hot. we've got a couple of companies that are off the radar screen that are involved and auckland. these are companies that are anything involved with the srgs of mortgages now that you get a million housing starts possibly, that group remains very strong. i'm watching toll finally recovering. i remember when you had the ceo on. >> yeah. >> i thought he said good things and the stock didn't levitate. it's levitating now. >> it is, definitely. take a look at general electric up by 1.5%.
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another strength for the dow jones industrial average. ceo jeff immelt quoted saying in sydney that spinning off ge financial, ge capital is on the table. >> never say never is what he said. which isn't exactly a ringing endorsement, but it leaves the door open to a potential restructuring of the company. >> a lot of regulators are buzzing. they're extrapolating and saying, listen, there is more dividend return on capital. this is one of the toughest markets i've seen day to day. i'm looking at some of the german stocks they follow. you see s&p. deutsche bank. these things are all over the map. can you imagine when you mentioned adobe? >> so i think that people have to recognize there are a lot of shorts in the market and because of a caterpillar or deere. how can the truck market be so
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different from the earth mover market. >> they are on equal footing in the sandbox where my kids are hanging out. >> your kids played in fracing sand. >> it was like a mcflurry. >> it was thick? >> yeah. it was thick. it was like a mcflurry. i want an egg mcmuffin. >> how long before one of companies come out with a fracing thing kids can play with, right? >> they have the dump trucks and the either moving thing. you need a big fracing thing. >> hess did a very big sale of eagleford assets because they have trucks and the stock's not down. i mean, what the heck? how can that not be down? >> juniper is down and continues its leg lower from yesterday. remember, it got that downgrade yesterday. the price target cut on juniper and the suggest thinking was that cisco was taking market share and it is down .8% right now. >> goldman on this anti-juniper
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pro-cisco bandwagon and doesn't show signs of letting up. >> a blackberry. blackberry is up 6 1/3%. >> how do you like that? >> blackberry, bed bath and best buy. >> the three bs. >> brahms, beethoven and bach. >> not bad equals the new good. >> i knew someone would have to mention it. >> i try not to. >> will you stay focused? >> geez. >> wow! apple. >> okay. apple. i hope they return capital and wish they had more growth. general mills. how about this one? some people say the top line wasn't so great. ken palo tonight and that is a dividend aristocrat. it's a dividend monster. we might have to do a bull/bear. >> look at what the stock's done, right? 21% over the past year? >> how can you not love a cereal company that you can sleep at night with, of course, they have
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many other brands that keeps raising the dividend. this is the market at large. the united states bank of general mills is unbelievable, right? no medicare problems. >> we'll have a debate and then you can tell the ceo tonight who won the debate about his stock. >> if you do that, i'll do it. that's a deal. >> all right. >> i'm a witness. give me a good one. >> i tell you, some of these ceos, we mentioned ken blake. they're delivery men. >> they're in the pantheon of great ceos. >> and laura, i know she's new to the company, but i thought that was one of the most impressive performances by a ceo. this stock has been creeping up ever since joe and andrew did the interview. >> definitely. >> there's a lot to be excited about and a lot to be depressed about. >> take a check on adobe as we were mentioning before. up by 5.5%. cto is leaving for apple and apple had a vacancy in the cto
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positions. >> we earlier heard it was a pete seger market and i'm going go a step further. it's a jimi hendrix song. what is it? >> "daze asked confused." excuse me while i do not kiss scott wapner. >> i don't, i'm not walking around with hendrix in my head. i should. i should. i was going to say a star-spangled banner market. >> i love that. i heard him play that at temple university when i was a young boy. >> let's check in with bob pisani on what is moving this morning. very crowded. >> we've got a crowd because we've got an ipo. model n here, looking at 18 to 20, but they make business software for life sciences and technology industries. 6.46 million shares and initially they upped it. now 6.7 million shares and priced at $15.50.
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12 .50 to $18.50. so this is going to pop. business software is kind of hot. remember what happened a while ago? >> that one was a monster, too. that priced at 28 several months ago and it opened at 48 or 49 and that's about $60 and another one, fleet matiches and this business software stuff is doing well. european bond yields generally are dropping in italy and it looks like the earning cb and euro zone are not going blink on cyprus! heaven knows if they'll get anything out of the rugs and ecb is not blinking and no indication that they'll cave in and give them all of the money that they wanted and they seem to be holding firm at $10 billion euros. >> solar panel sun tech and it looks like they're declaring bankruptcy in china. the important thing is it looks
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like they defaulted in debt. the stock dropped and it's essentially a penny stock at this point, but solar manufacturers, you know, they've been collapsing, huge glut in supply in the last two years with extra capacity. this is one of the big of the in the world and is it going to matter at all for all of this overcapacity that exists in the solar industry and i don't know. i can tell you this, if they restructure, start up again and the government nationally or regionally just keeps pumping money into the thing it will not matter at all. they will have the oversupply capacity. >> more on that later on fedex's earnings, you talked about it and it's not clear whether there is a drop of international traffic and it's also people who are still shipping and simply trading down to cheaper services and that doesn't mean global industries are shipping less and it's a matter of perception that
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can make a big difference. >> home builder lennar, new orders up 34% and they hit all of the right metrics here. strong demand, low rates and high affordability and low inventories and fewer competitors. they've been killing everybody. small builders are getting put out of business and the problem with all of them, jim. we know this, you talked about it, we talked about it and the valuations and many of them are two times booked and historically it's high. lennar, i have 26 times 2013 consensus. that's the problem with the builders. everything is working their way, but the price of the stocks have been there. still 18 to 20 on model n. we'll have the ceo talking to you guys shortly. >> great wrap-up, bobby! i've been struggling with homebuilders and the fundamentals are getting better. in china, do they execute a guy. they executed the guys when they had drugs out. i don't know. they mean business over there. china means business and by the way, fedex, i have a new slogan.
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when it absolutely, positively does not have to be overnight. let's shift to bonds at the cme group in chicago. >> thanks, jim. today we'll talk all two-day charts and it will give you a good perspective. second day of a two-day fed meeting and most traders down here think what has occurred will continue to occur. we can debate whether you need it or want it to occur. as far as cyprus, the fact that it was considered, the confiscation was considered, it could never be pulled back to many, but not to the markets. whether it's qe or what's going on in cyprus, the markets seemed to look past it. two-day chart of tens and yesterday on the news, the lingered news of cyprus, we traded under a 190 yield and we started out when the story first broke dropping down to a 194 and 195 which is where we are right about now and if you're looking
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at a two-day boon and the two-day chart tells you something very clearly and it's still under 1.40, still flirting with the lowest yields of 2013 and if we look at the foreign exchange markets it really summarizes everything. a two-day chart of the euro versus a dollar. yes, we're much closer to 130, but we're under it. yesterday we traded around 128.40. it gives you a glimpse of when where the trigger points will be and it isn't only against the dollar and all of the cross trades are enlightening, and the patterns are the same and when i look at foreign exchange thshgs is the risk on days where every major currency is doing better against the dollar except for the yen. back to you, jim. >> no memory whatsoever of what happened the other day. let's check out the latest moves in energy. >> there say lot of momentum here in the energy market and we're looking at brent crude
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prices that have risen from a three-month low and it looks like the gains that we're seeing in the oil market are mirroring what they're seeing in terms of the rebound in the euro and what we're seeing in the equity markets as well. the cyprus fears seemed to ease quite a bit. we'll continue to watch what will happen in the u.s. supply front when we do get the eia report on inventories out at 10:30 eastern time and we're also watching what's happening in the gold market because that will be susceptible to whatever move the fed will make and many traders anticipating to keep doing what they're doing and gold holding steady here and still above the 1600 level. the key, of course, will be breaking above the 1610 for the settlement and they keep saying that is what is needed to give the bulls the momentum to take gold prices much higher. back to you! sharon epperson for us. a technology company is making its wall street debut today.
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we're waiting for model n to begin trading and after that happens we'll talk with the ceo right here at post 9. also taking the pulse of the consumer from consumers to restaurants we'll talk to tilman fertitta and bubba-gump shrimp company. as we go to break, this morning's early movers.
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visit a branch or call now for your personal retirement review. biggest week for eps model n and a big cheer and it has opened for trade up 20.35, keep in one, this is one that priced above the range and increased the model of shares offered and model n, first tradex cuted moments ago. huge pop to the upside and this is one that was widely anticipated with another tech ipo and marin software expected
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to make its debut this week. >> rich peterson emailing saying that in the past 12 months the average first-day gain for a tech ipo is more than 23%. this is pretty good. >> you throw in the word cloud and throw in the word subscription and throw in the word supply chain. >> and they have it all. >> throw in customers, j & j. >> and they're all standing around shaking hands and there are several officials all talking around and there are some nyse officials there shaking hands and giving people tours and family members and this is what it's all about, folks. a big day for all these people. a good open. business software is hot, folks. so remember, 6.46 million shares and they up that to 6.7 million shares and the price talk was 1550 above the price stock, now trading at $20.55.
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and priced at 28 and opened at 48 and it's at $60 today. fleet mat beings and fltx has done well today. right now $20.65 at the highs for the day. guys, back to you. >> bob, thank you very much. bob pisani at the opening. >> time for "six in 60." >> everybody loves walgreens and talk about a game changeange people can't get enough of walgreens and it can't get enough of the whole industry. so i understand it, bingo, the stock goes higher. >> anadarko, can you believe a new finding in mexico will have shares up in wells fargo and the stocks are flying. >> zynga. >> valuation. where were the people when the stock was double? >> this m.s. franchise and this stock getting stronger and stronger. >> watch celgene. >> cintas. >> it has costs and it looks like this company did well and not so well on the bottom line
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and people are selling it, but it's a good employment situation. >> sky works. >> when they ding apple, they ding skyworks, but the stock did not go down, i don't know what it's doing, but it ain't bad. >> general mills, i love stocks that go up over time slowly and then when they report, actually accelera accelerate. that's general mills and ken pal. we should be talking about guys like ken powell more because they are what makes investment fabulous. great balance sheet and we all know their product, by the way. general mills and a great manager. 52-week high and great dividend policy and he has what i call the social compact with his shareholders. he will raise his dividend and buyback stock. i'm looking for social compact ceo steve holmes from wyndham worldwide. that stock has the ultimate social compact and the biggest move from the bottom in march 2009. i'm going for the social
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compact. >> all right. i expect to debate on your show. >> all right. >> toss it. i'm using one of those terms. >> i got you. next up on "squawk on the street," the ceo of model n on the company's wall street debut and that, of course, is on the very hot start on that trade and the stock is up 34% right out of the gate.
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is. >> model n debuting on the big board and model n makes management software for the life sciences and technology industries. modn trading higher by 36% after its ipo price well above expectations. fresh marine and the opening bell and the founder, chairman and ceo of model n. zack, congratulations. it's great to be here. >> explain to viewers who may not be familiar with this exactly who your company does and who your closest competitors are. >> model n produced in the management software. you can look at where the companies focus in the last 25 years was in cost-cutting and business process automation. we are managing the top line of the income statement and the revenue line and we manage every dollar, the top line of the income statement. we pioneered this new market
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space a couple of years ago and we sell it to technology and life sciences company. >> sorry, congratulations. >> thank you. >> the group of customers. some of them are the greatest companies and johnson & johnson and merck, for instance. they've been challenged on the top line. do you help bring out, lately, do you help bring out earnings from the top line that may be challenged? >> absolutely. what we enable these customers is to increase the top line and the bottom line. we capture revenues that are already in the system and making sure that you don't have revenue leakage and i'm very proud to say that johnson & johnson and boston sciencific are on the floor. >> is gorsky here? >> no. he's a good guy. >> he's why that stock is going 63 to the mid to high 70s. >> and that's why he uses revenue management to the next source of competitive value for the company. >> i have zack --
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>> congratulations, first and foremost. someone who just walked by pointed out it's a small float, a tiny float that seems to be the trend. does that mean we'll see a successary in a couple of months from now? talk to me about that. >> so i've not made the decision yet to go secondary. you have to take it from a company point of view, we raised our last one ten years ago from 2003. we grow 10x on the top line and we doubled the size of the company in the last two years from 300 to 600 employees. so we didn't really define our strategy there and our focus is going to be continuing on our customers and on delivering value to them and working together to create a great company. >> in terms of your expansion plans and growth plans, you focus on two sectors. what is your penetration in those two sectors and is this software applicable to other
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sectors. >> absolutely. revenue management, it's something there, but we're a company that is a specialist. we decided to partner with the companies and deal with the most strategic needs with the companies in these industries and it was a focus of ben and how we think about it from the attention point of view. we plan to stay in the states for quite some time and why we partnered with the company's industries and we you in feel you can take it with the rest of the industries. ? thank you. very excited to be here. >> the founder and ceo of model n. today's ipo and good luck to you and your company. >> simon hobbs with a look at the next hour of "squawk on the street." we'll have a rare and exclusive interview with the head of samsung america. we'll also look at how you position this market ahead of the fed this afternoon at 2:00, 2:30, and snail mail is getting cooler by the day. this is cnbc on a wednesday this is cnbc on a wednesday morning.
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good morning. let's get to the road map for the next hour of "squawk on the street." we have lots of green today.
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investors looking beonthe drama ahead of the fed's decision. we are live from cyprus, russia and d.c.. >> samsung will announce a big product launch and it's not a smart phone or even a watch and the president of samsung, electronics america will be here on cnbc with the details. >> and j.p. morgan once seen as a shining star, but is the bank's reputation getting battered and bruised? we'll have the story. >> also the herd of bulls on best buy is growing. will this be the comeback stock of the year? >> so the s&p coming off breaking its declining streak and its three-day decline of 2013. the dow hitting another new all-time high just moments ago. the focus is clearly on the fed this afternoon. the statement at 2:00 eastern. news conference at 2:30 eastern. let's bring in jim paulson, chief investment strategist with wealth capital management and jeff cleveland joins us.
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thank you for joining us here on cnbc. jim, let me kick off with you. >> how easy is this tap dance for ben bernanke this afternoon to say, yes, the danger is getting stronger in the united states, but still, i'm going to be printing cash at $85 billion a month and possibly for another year and a half according to goldman? >> yeah. i -- semon, i think the fed has a good argument to be made to stay accommodative given until the unemployment rate gets lower and until growth in the economy picks up, but i failed to see. i think they're losing their case for maintaining a depressionlike, crisislike monetary policy that's unconventional and massive in size when the economy is clearly no longer in crisis, and i think they're increasingly running the risk with the investment community of going from helping fundamentals to hurting
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confidence in the future. >> one of the major things they care about and that's exactly what they're doing, that's very important. i'm one who believes this is not a sugar high market and i think it's fundamentally based and profits are up as much or more than the stock market is in this rally. a lot of things have improved fundamentally including balance sheet ratios as well as the job market and lending markets and housing market. i think it's not so much to do with the fed liquidity than it is a fundamental improvement in the economy. i think the fed could exit without creating as much risk for investors as people perceive. i'm curious, do you see the stock market hitting new record high after new ridiculous high matching what you see in the economy, and if that is the case then maybe we should see ben bernanke soften his stance when it comes to qe? >> i think the economy's getting better. i think the job market is getting better and the housing market is getting better, but i
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don't think the fed sees it that way. i think the fed sees the employment to population ratio. you have virtually no recovery in the last three or four years. you look at labor force participation and that's down. so they're very, very comfortable, i think in maintaining this easy policy because they think that's what's needed to keep this recovery going, and i think they're going to be comfortable because core inflation is 1.5% year on year. >> i think there's a possibility of more dovish. we're not sure that the data is sound. maybe there will be giveback in the spring and if he starts mentioning the sequester and the need to hang in there with full force, that, ironically, could be very positive for this market. >> absolutely. i think his statements today, the press conference will be very dovish. he can point to downside risks and lump cyprus into that scenario and maintain this easy stance.
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there seems to be a seasonality here, simon, where every year at this time there are press beings of the fed exiting and the fed tape erg policy and that sort of goes away in the spring time and it's sort of seasonal. i think many we get a little bit of that here at this particular meeting. i don't expect them to change their stance coming out of the meeting this afternoon. >> jim paulson, do you care about cyprus today? everybody seemed to care yesterday. the dow is up 75 points today even in the face of disappointing news from caterpillar. fedex on its earnings and the deere downgrade and you can probably point to some other things. >> well, scott, i think that this problem comes from a well-vetted part of the world that the problems have been well vetted and i think what it says to me more than anything which is a good thing is the market is finally moving on from crisis mentalities. i think also -- every problem coming out of europe is a crisis. it being just be a problem and i think that's what the market is saying on this. >> let's go back to qe because i
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find it fascinating that investors at large, speaking generally here believe that once the fed hands the qe, may not be on the table anymore, but the markets will pull back in some fashion. >> jim, i'll start with you. you said you did not think they were built on qe. will we see reaction once the language changes? >> i certainly think you'll see headline reaction and the traders will use it like they use any headline to trade it down, but i don't think -- i think it would go the other way. i think if the fed show some confidence, i think it will build private sector confidence as well, it will do another thing, by staying the course with massive, unconventional easing and an economy that is no longer in crisis, guys like me will get worried that they'll create more fallout and unintended consequences. >> right. >> so if they start to pull back, for me that would build
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confidence in the long-term sustainability of the recovery. >> i think that's going to be the fallout, unexpected fallout. i think the conference would rise if the fed starts to exit. >> now i want to go to jeff, the economist. so you don't think the economy's gains that we've seen so far are built on qe existing in the system. at this point we're on our own, yeah? >> absolutely. i think qe, the effects of that in the economy, you should be skeptical and dubious about those effects and all they're really doing is an asset swap and the fed has more treasurys and agencies and the banking system has more bank reserves and nothing else has changed in the economy that the gains we've seen -- >> the housing market has certainly turned around. don't you think that fed policy and the stimulus has had at least something to do with that? >> maybe on the margins, but housing is a question of we stop building houses. we really screech to a halt the progress of building and woe
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wo we worked off some of the inventory and it's the market that's driving housing and not necessarily the fed. >> you can debate whether policy is good or the policy is bad. policy has had no impact or a small impact on the performance and turnaround of the economy in the housing market. >> i think the biggest impact they're having here is displacing bond investors from a large part of the bond market. they're taking safe assets. they're taking treasurys and agencies effectively out of the marketplace and that's displacing bond investors and that is having an impact, absolutely on the financial system. >> whether or not qe is having an impact and it's interesting for you both to say at this point in the stock market and in the economy, qe is not having an impact because that's where we are right now. whether or not it's going to be impactful and meaningful from this point forward. it's good to get your input, guys. thanks for the conversation.
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>> we wouldn't be talking about the dow, melissa, up 70 points right now if qe was taken away this afternoon. >> i'm not disputing that. >> i find it fascinating that both of them say at this point of in time at the end of the day qe is not having an impact. >> i disagree with that. >> even if you look at what janet yellin says there is an impact. big corporations can borrow cheaply and they have record profits and you can see it there, wealthy individuals are benefitting from the stock market. four people, small medium-sized businesses are not doing so well and they can't get credit from banks and there is a split in the american economy and the asset markets are doing something different from what the real economy is doing. >> right. >> we have to turn our attention to cyprus. the country's leaders are holding crisis talks today in hopes of okay, verting a financial meltdown and unprecedented bank deposits and the key parts of bailout terms. joining us from cyprus is our
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chief international correspondent michelle caruso-cabrera. michelle? >> hi there, scott. >> as a result of rejecting that plan last night in parliament and now it's plan b and it's emergency meeting after emergency meeting to try to fig you out a way for this government to come down in euros in either savings or revenues in order to get a $10 billion euro loan to bail out their banks. they've got to come up with that number or else we'll come up with a meltdown. in the wakes of the vote yesterday told the cypriots. don't think you're negotiating this deal. don't come back to us. it was a toughly-worded statement. russia, by the way, is not buying one of the troubled banks. there had been a report that that was going to happen that briefly spiked the euro. and one of the government spokespersons immediately said it was false and we saw that rally disappear. there's a cabinet meeting two hours from now and at some point
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they've got to announce, what are they going to do about the banks tomorrow? are they going re-open or not? it seems implausible at this point and the blame game is in full swing. just who is it that allowed or condoned or suggested the idea that the lower threshold of 100,000 euros should be taxed? >> listen to the statement out of the european commission. one of the myriad of bureaucrats in brussels. the commission made it clear in the euro group meeting before and they capitalized before, the vote in the cypriot government that an alternative solution would be acceptable and preferably one without a levy on deposits below 100,000. the cypriots did not accept such an alternative scenario and they squarely placed the blame on the guys in the parliament building behind me. so we'll see what happens. the breaking point is at some
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point we're not going to keep stuffing the atms with money. and they'll have to figure it out and close down some banks, et cetera. >> i respect the detail that you've been through, but this market clearly believes that the deal will get done and the banks will get propped up with international aid. we're up 72 points on the dow. nobody in the market appears to be worried about it and we haven't seen a big move on bonds today. how do you reconcile that with what you're witnessing in nicosia. >> i am wondering if the interpretation that you get in the market, and even if the market goes that the markets aren't worried about the ripple effect. ultimately, it's a small economy and when you look at a small country and when you look at the situation and understand the numbers it's pretty tough believe that they would have to do some kind of deposit tax anywhere else in the european uni union. this is pretty unique and so maybe that's another
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interpretation. >> michelle, thank you. >> michelle caruso-cabrera on the ground in cyprus for us. >> they're working on a smart watch and today they're at it again with yet another beg-time launch. the president of samsung electronics america as samsung's product gets set to hit the market. we are live from the fomc statement. did bernanke kill the momentum? steve liesman is live from washington straight ahead.
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>> >> sam is upping is holding an event to unveil its products. tim baxter, president of samsung electronics america. good to have you with us. >> certainly a lot of changes have gone on with the tv in the living room. at this point what are the big products you're unveiling and why should consumers care about these products? >> the big things we're focused on is injecting more excitement and wow into the television experience. there's been a great deal of that in smartphones and tablets. so what we're introducing is a new line of smart tvs that
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really allow you to organize and cure eight content in ways similar that you're doing in a smart phone or tablet, for that matter. >> so you brought out devices to demonstrate and one of them was a smaller tablet that was unveiled in barcelona and you can control the tv with this? >> 80% of the consumers who are using a tablet are using it while they're watching television, right? so why not provide more connectivity in the tablets to add value and control to television. so this allows you to control the television, watch programs and in essence, share content between the tablet and the television. >> i have to ask you, is this all a push to create a samsung ecosystem? if you're integrating the tablet for the next step being for the galaxy s4 in the tv experience and creating that ecosystem when it comes to a competitor, apple. >> we really are focused on recognizing that consumers want
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to share content across the devices and we're taking a very open approach to that, and we really looked to provide more value in that experience, but do it regardless of the operating system that which the consumer operates. >> they're positioning ahead of the launch, the possible launch of apple tv. what do you think that will look like and how are you meeting it head-on? >> our focus isn't so much on what someone else is doing, but really about what we're creating. we are now in our sixth year of smart tvs. so we've learned a lot about what consumers want and don't, and now we realize that consumers have access to 800 channels of television, right? they also have a plethora of absent other content and we're trying to make that an easier experience. >> one of the things that's very interesting, it was the london olympics for the launch and it's here on wall street and radio city last week this time around and truth be told whether you want to be perceived through the eyes of apple and you often are. the conversation is about apple
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because apple is quoted here in the united states. do you think you will sell more product and have higher profile if you were quoted in new york as well as in south korea? >> you know, we're really focused on delivering what the consumers want and that's our team's energy and area of focus. >> do you find it a drawback that you're not quoted here? do you think you can get more leverage? >> i think from a consumer standpoint, no. >> we are focused on what we're looking for and how we're trying to bring those experiences alive to them. >> i appreciate on focusing what you want to bring to the consume sxernt your competitors and getting these products out ahead of a potential launch for apple tv which is expected. it gives you a lock on the market and eyeballs will only look at your offering and maybe others before an apple launch that had to be by design, no? >> we are very focused as a company. we've been for the last six years here in the u.s. and i use the example of televisions.
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six years ago we were a 10% market share player. today we're 30. it's about create something thing that's in the market first, regardless of the competitor, it's about leveraging our rnd and capex which amounts to $20 billion a year and bring out unique designs, build a brand and given we have a unique position in creating many of the devices and gives us an advantage in the supply chain which is important in this industry. >> i am curious if so much of the focus is on the galaxy and the smartphone and mobile device universe whether you can innovate and develop products in other areas to the same level of quality that you are from a smartphone standpoint. is the technology the best that it can be? are you getting the money that you need toward the television innovation, for example? >> we're very confident in what is happening in the television wear and the best example of
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that right now is not only are we introducing tvs that enable you to access and cure eight content and learns what you want and gives you suggestions on it, but we're also providing a future-proof solution. so we introduce this next month, an evolution kit that basically enables you to bring the benefits of the 2013 of it into your 2012 tv. that's innovation. >> why wouldn't you want consumers to go out and buy a 2013 tv? we want them to do that, but how many times have you made a purchase and a significant purchase, several thousand dollars and six weeks later you hear about the newest thing? >> these days, six minutes later and the average life of a television is five or six years so we want to provide those consumers a multi-year upward, upgrade path and it gives you the benefits of the 2013 tv. >> do you feel like you have to
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re-introduce yourselves to people as a television company and a good one and a market grabber just because of what the galaxy has done. people don't necessarily think of you today, maybe to the level that you want from a television standpoint, do they? >> i think they do. i think as consumers go into the purchase funnel, our brand preference, our brand awareness and the brand people are choosing is samsung. so that is, as you go through that process, we're winning and the consumers are voting with their wallets. >> just before you go. do you make much margin televisions these days? >> televisions, we're doing well in the television business. >> what sort of margin do you make? >> we don't quote that. >> what's the range? >> we're feeling pretty good about where we are and we don't specifically talk to the actual margin, but it is a category we do well in. >> it is a profit? >> yes. >> tim, great to have you with
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us. thanks for stopping by. tim baxter of samsung electronics america. >> coming up, we're checking the pulse of the consumer from the dinner table to the slot machine and we'll sit down with tilman fertitta from morgan's steakhouse and mccormick and schmitt. investors are showing new love for private equity stocks. the answers might surprise you. we're back in two minutes.
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welcome back to "squawk on the street." i'm josh lipton. polycom is enjoying it, the analysts like the videoconferencing provider. three catalysts, goldman says upside to consensus ref you. >>s as hardware and videoconferencing recovers and eps outperformance held by margin upside and new products and goldman says polycom is a buy and the price target is 14 bucks. >> thank you very much for that. we'll take a quick break. after that, trouble for the transports and a big miss on eps today for fedex. is management waking up to the fact that we live in a world of austerity and snail mail is cool.
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one hour into one hour into trading. 10:30 on wall street. the heavy machinery company trading lower on news the sales fell 13% in the three-month period that ended february. travelers, chevron and johnson & johnson each hitting new all-time highs in a strong wall street debut from model n trading 38% buf its ipo price of
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$15.50 a share. we have sharon epperson for crude oil inventories. >> the latest number from the department of energy show crude have expected to risen and that normally is what happens for this time of year, but we are still waiting for that number to come out and looking at prices that are off of their highs of the session for the price of crude oil. keep in mind, as we normally see a bill this time of year it's due to increasing imports and a lot believe that will not happen this year and we are seeing a draw in crude for the week. it shows a decline in crude declines of 1.3 million barrels and 1.3 million barrels and gasoline supplies have fallen by 1 1/2 million barrels and a decline was expected there. >> distillate fuel supplies are down by 700,000 barrels and the decline was also expected there. the reason, perhaps that we're seeing this decline in oil
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supplies when it was expected as traders pointed out, we've seen a divergence between what the industry has reported and the american petroleum institute and what was reported by the energy department. now those numbers are closer in line. there's only about a 6 million barrel difference right now between those two reports and that's come in a bit as well. >> keep an eye on the oil price and we are looking at oil prices below $92 a barrel and whether or not it holds above the $108 barrel level. back to you, guys. >> a lot of that will have to do with the fed and what the dollar does. let's head to d.c. where our senior economics reporter steve liesman is located in anticipation of that and this, in a sense, is the moment that as the senior economics reporter, steve, this is what you live for. nothing is greater than fed
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minutes. >> if you don't mind can i put my wife and kids ahead of that and then the federal reserve in the second position, if you don't mind. >> the fed expected to say today that it will continue to buy $85 billion a month in mortgage-backed securities and it will do so unless there's substantial improve am in the labor markets. stephen stanley writing in his analysis and the markets overreacted earlier in the year and he means comments from bernanke to recognize that that does remain firmly in charge and that from steven stanley and there will be considerable interest in the forecast which we get four times a year because policy is tied to that. they see unemployment declining to only 7.55% this year. it's already, the real number at 7-7 and 7-7, the high end for the range of all fed members and
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that is almost surely going come down and important also bringing down the forecast for 2014 probably below that 7% threshold right now. a lower unemploy am forecast can prompt it to just a bit earlier and the fed begins tapering those quantitative easing. and the markets expect the tapering right now in january 2014 and they expect the fed to stop qe in may. other questions likely to be discussed at the meeting today. how real is the decline in unemployment? does the fed factor that in? issy is quester and the gdp impact factored into the outlook? how much does cyprus change the assessment of global financial risk and how much concern is there when the fed stops buying assets and the potential costs? lou alexander writing in his analysis today. fomc members have made it clear that systemic risk could be an
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important part of the cost and benefits of their asset purchases and lou alexander thinks that new language on risk could be in the statement today, but others counter this would run against the fed's primary goal which is not to undermine the market's belief in continued qe. so they say a change in the language is unlikely, simon. >> you know, steve. it's astounding to reflect on the fact that we've now had ultra low interest rates for four years and goldman is suggesting today it could be another three years that they stay that low. ultra low interest rates in america for seven years. that would be astounding. >> it would be. so seven years would bring us out to 2016. i think that's a year beyond where the average consensus in the market. goldman may be more dove earn, but not out of bounds, i would think. it depends on how you define ultra low interest rates and it
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is not crazy to think that it could be 2% in the fed funds rate and that's a big question that when the fed starts to move how quickly will it be forced to move and why? will it be because of inflation concerns that would force it to move and move very quickly, but 2016 being the outside of the range of when interest rates are thought to rise that the point. >> steve, it's great to see you so revved up. i look forward to what happens this afternoon. be sure to catch cnbc's special report. "the fed decision on interest rates" with special coverage kicking off slightly earlier because the times are changing at the fed. and we'll start that special at 1:50 p.m. so t10:00 to 2:00. it fell short of street's estimates. shares of fedex are down 5% this morning and there's a look at the chart so what does it mean for the broader transports here?
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let's bring in jim corridor of s&p capital iq and he has a strong buy on fedex and a $129 price target. ? good morning. >> good morning. >> what's your biggest takeaway from the report this morning? >> certainly operating margins declined more than we were expecting, but it happened for a reason that we already knew and that fedex has identified and that's that international trade networks are moving more toward deferred and it's impacting margins and the company has a plan in place to take care of that. they're expanding on the plan today and they're redesigning their international networks and you think they're on top of the issue. >> why aren't you more concerned about the shift away from premium customers and also the international air weakness. those are two important metrics and you sort of seem to be brushing them aside as ho-hum. >> not brushing them aside, but it's a shift that's been coming on for some time and in the profit improvement plan meeting and it's something that they're on top of, i believe, and
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obviously, it's never good to see a company miss expectations the way they have today, but i think it's for an identifiable reason. if it was something that surprised the can company and if they didn't seem to have a plan in place, and then i would be more concerned. >> you and i have had this conversation before and fedex has been slow to realize that this capacity was too great and in the wrong place. it did not see what was coming. they might be moving now, but management, i don't think has been on top of this quarter on quarter on quarter. i think you've been generous in your analysis. this is something that you can't turn the ship around in one day. they are network redesigns that will take time and it will lead to operating margin expansion and i believe the plan will work when you see operating markets to the extent that they have today and they're identifying the problem and redefining their network. >> i'm interested, in terms of
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customers choosing less expensive options overall. do you think it's something temporary and tied to this economy and that will turn around or is this a secular change in this business where customers will realize, you know what? i never needed to ship that overnight or i never needed to get that there two days. i could go longer? >> yeah. the company's decision to redesign its network is a sign that it's a secular shift. certainly, it will be one of the customers that will accelerate their shipping methods. >> so what's the new multiple then? if we are to assume this is a secular shift and this is a new model that fedex and ups, for that matter, will have to adjust to. what is your appropriation for that sort of i business? >> you have to take a look at what the margins will be. the company will have to get the margins back up by pushing them in the high margin and back up into the planes and up into the belly of a liner or ocean craft. valuations for the company should not shift and also it's notable that fedex and ups are
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both trading toward the low end of the ranges. we think too low. >> jim, good to talk to you. >> thank so much. >> jim corridor, s&p capital iq. >> we'll send it back to josh lipton at headquarters for a market flash. >> on this up day, facebook slipping a bit here. btig. rich greenfield out with a new note. facebook, it says, is disconnected from its mission and now about doing anything at all cost to the user experience to monetize users and boost revenues, brands, targeting users without any connection to them. the analyst saying that the speed at which facebook is rolling out new products their -- btig says facebook is a sell price target, $22. melissa, back to you. >> thank you very much, josh lipton. >> still ahead, the bull parade
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for best buy rages on. they slapped an outperform on the shares. after the break, one of the earlier bulls piper jaffray and the analyst who upgraded best buy on march 11, is he sticking by his claim after the run and what does he think about the street's latest love affair? stay tuned. they don't have pictures of my kids. they don't have my yoga mat. and still, i feel at home. could it be the flat screen tv? the not so mini fridge? ♪ the different free dinner almost every weeknight? or maybe, it's all of the above. and all the rest. am i home? nope. but it almost feels that way. homewood suites by hilton. be at home. homewood suites by hilton. (announcer) scottrade knows our 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 so i can react in real-time.
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let's let's get to best buy which got another upgrade from credit suisse today. this follows a slew of other updates. peter keith is senior research analyst at piper jaffray. he upgraded best buy and raised his price target to 26 from 16. good to see you. >> good morning. >> does it matter at all that all of these analysts are following in this bullish parade on one single stock? we're all living in the aftermath of what happened to apple and i would hate to make that comparison, but we have so
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many people jumping on the bandwagon all of the way up, very positive and then the stock falls out of bed for some time. are you concerned? >> i am not concerned. certainly, you liken a sell side analyst to be one of the few people recommending the stock. if we look at the positioning of ratings today there are 24 analysts that cover best buy. we now have ten equivalent ratings and it is by no means a consensus buy from the sell side. and longer term, looking at this it's still one of the cheapest stocks and it's actually the cheapest stock that i cover out of the 19 stocks and with the new management team coming in, we think there is a substantial upside opportunity over the next couple of years. >> i would think it's one of the cheapest stocks and maybe it's cheap for a reason and i'm just going to play devil's advocate here and within your sector are there many stocks in which the industry is undergoing some very difficult changes in terms of a transition to more online sales, very tight margins and best buy
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is benefitting from being one of the only bricks and mortar retailer of electronics goods so it should, in theory benefit from last-man standing sort of mentality. >> right. so we were certainly not expected to be one of the more expensive stocks in the universe over time, but if we look at the way the new management team has come in i certainly don't want to belittle the previous management team, but the previous management team was fairly insular, and i want to say grew up with the company in the 1990s and early 2000s. they were very good, the previous management team, at beating up circuit city and other smaller consumer electronics retailers. what the company needed and i think this new management team that's come onboard recently is someone who can operate best buy in the new world and compete better against the like of amazon and compete better with the changing product cycles and get a viable e-commerce going and we think those are great
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long-term initiatives that could drive earnings and valuation for several years. >> you use the expression long term, and why do you note that they have several unique headwends that a turnaround is not taking place. >> the company did a good job on its q4 conference call, talking about challenges to q-1. there are a couple of one-time items and the super bowl shifted into q owe4 and you have tv sal and there are investments that you're making that will be front end loaded to q1 in the first half of the year and they have a difficult gross margin comparison and it will not be incredibly exciting and we'll look for some little data points within the release that suggest the turnaround is taking hold. >> peter, great to speak with you. >> piper jaffray. >> now to some other names seeing love on the street. specifically private equity names and kate kelly got the
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lowdown on the private equity stocks. hi, kate. >> thanks so much. we're seeing a renaissance for names like fortress investment group, kkr and blackstone with massive rises relative to the stock market. take a look at fortress and kkr in particular. kkr has gone up 33% in the last four months and fortress a whopping 67%, but the biggest names occurred this calendar year. and we've seen a huge upsurge? 2013. one is the portfolio investments these companies made in their own books before the financial crisis may now be coming to their so-called harvesting period where of course, ipos and other liquidity events allow the private equity firms to cash out and hopefully at a profit and that leads to dividends known as distribution in the business that add to the value of owning equity. >> in general it's a play on the improving stock market in general. as long as there's liquidity on the market and for new issuance,
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the sponsors should do well as their rationale. still, it's a win to win business. take a look at last year. it's about half of what it was during the market's peak and if the broader market turned south, goldman sachs, for one is predicting that these stocks could face what's called a pe cliff in which they can't harvest the holdings and for now goldman and other investors say move quickly if you want to buy the attractive window to do so and closing soon as more people catch on to the fact that there could be upside potential here and it's something to watch and move fast if you're interested. >> any names to avoid, kate? >> that's a good question, simon. oak tree is one that goldman sachs downgraded from a buy to a neutral. they just don't see as much potential and one of the distressed lending will face additional headwinds and that's something to keep in mind. fig is still a relatively cheap
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stock and it's nearly 70% and some people think they have room to run. >> kate, thank you very much. kate kelly there on pe buys. >> rick santelli sounds off next on the show and how's this for a good investment, turning a $3 purchase into $2.2 million. >> simon's favorite story of the morning. >> it didn't actually happen on the stock market. we'll talk china china next.
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welcome back to "squawk on the street." rick santelli here. the wednesday edition of the santelli exchange. don't you just love march? i love march. i love march madness. march madness. it's a blast. we're all picking our different brackets. so march madness has arrived. you know what i consider march madness though? when it comes to this this domain, i think things like cyprus. that's march madness. new all time highs in the dow. a bit of march madness. look up the definition or morality. i'm going to pontificate. it's the principles concerning
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the distinction between right and wrong. i personally find some of the issues regarding how stocks got up as rather disturbing from a morality issue. whether they do it or not. they said it and thought about it. markets are not disturbed by morality. and that's why to ask a trader, what do you think of the fed program, that's like whasking a kid about candy. and when it comes to the fed, the issue is, to power up the grid, i don't like unnatural gas powering the economy. the interesting thing about natural gases or anybody who has cats is that you walk into a room and you smell natural gas.
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that aroma disappears and becomes normal. and when it comes to basketball and the fed, i find a couple of things interesting. especially the final four. quare 4. in today's statement are we going to find out qe4 is the final four? i think louisville and indiana are layups. not so sure about florida. and we also hear that the budget will be coming shortly but we do have the picks today. >> still ahead. the ceo of landry's restaurant joins us straight ahead. plus, turning a measly $3 into more than $2 million. i'm lorenzo.
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this. 1,000-year-old chinese bowl that sold for $2.2 million. the buyer, a london dealer. the seller, a new york family that picked the bowl up for 3 bucks at a garage sale. the bowl was from the northern sungh dynasty. the bowl sat in the family room for years and they decided to have it appraised. >> they probably knew -- did they go to the garage sale and go, that's nice over there. go get it. >> maybe they thought they needed ha new container for their m&ms. >> you could be on cnbc's treasure detectives. they are going to start doing shows in china because that's where the buyers are. >> it's about time. scott, it was great having you on. we'll see you here tomorrow.
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>> i will be here tomorrow. >> in the meantime, you're getting prepped for the half. >> i will. what before the person to have than her to talk about what's taking place in europe. a great read on what's taking place in our markets as well. >> no rest for the wicked. >> nope. >> see you in an hour. if you're just tuning in. good morning. here's what you play may have missed if you're just joining cnbc at this stage. >> welcome to hour three of "squawk on the street." here's what's happening so far. >> despite the very peculiar rhetoric that german voters hear from their politicians, germans have benefitted handsomely. >> it's cheaper to buy than rent. when you take into account the costs and proceeds of both owning and renting.
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>> fed-ex is so loved and hated. it's a truly bipolar stock. is he able to say whatever he wants? the future is coming in and they blast it the moment they open their mouth to try to cover it negative. then people kind of like it. blackberry is not as bad as it used to be. buy. >> not as bad as the new. >> the new good. >> i think they're losing their case for maintaining that the pressure like, crisis like monetary policy that's unconventional and massive in size when the economy is clearly no longer in crisis. >> so we're introducing a new line of smart tvs that allow you to organize and curate content in ways similar to a smart phone
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or tablet. >> wednesday morning. good morning. we're live here at the new york stock exchange and the american stock market has resumed the rally. the s&p 500 heading back towards the all time high of 1565. maybe we won't get it this afternoon, but certainly the losing streak has been broken despite huge questions on cyprus. at the corporate level, sparking 40% higher for model n. above the range at $15.50 and opening at $20.30. the stock trading at $21.36 and zynga adding to its losses over the last week. down another 5% give or take today. bank of america downgrading the stock frto neutral from buy tod. zynga faces competitive real
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poker launches that could dampen the enthusiasm. higher across the board. the s&p 500 renewing the march to the all time high. investors brushing off worries over cyprus and looking ahead to today's fed meeting. we'll preview what we could hear from ben bernanke this afternoon. plus, blackberry surging higher on an up grade. not everyone on the street is convinced. we'll talk to one analyst about why he's still a seller of the shares. and the chairman and ceo of landry's restaurant tells us how he did it. >> okay. let's get back to markets, which are trading higher as we await the fed's decision this afternoon. 2:00 is the decision. 2:30 is the news conference. you can see it all live on cnbc.
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stewart freeman joins us, a chief equity strategist of wells fargoed fargo advisers. stewart, where does the market go from here? >> we'll, we're in a good position. we're seeing revenues grow. we're seeing more breath in revenue. we're seeing more breath in the number of individuals being touched by -- even the slow growth -- touched by the recovery. and i think we're going to see a well oriented market. right now the target on the s&p 500 is 15 at any time 25, 15.75, that's probably conservative. >> you have not changed it in a long time. why is that? do you not have your convictions? >> we initially put the number out in october as we were going through the election and fiscal
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cliff. we kind of entered into this period of blue skies in a lot of ways. a enyou know, we are not a quarter sbo the year and we think the the earnings estimate is conservative and we think the odds are that target should come up as we move ahead. >> we look forward to you publishing that. well -- >> peter, are you also in the blue skies category? >> well, i'm not sure about blue skies. i do think from a technical perspective things look pretty good. that is not to say i would rush out and buy the s&p 500. i do think it's a stock picker's market. plenty of stocks are trading at reasonable p.e.s. that's what people have to focus on. if you look at inflation adjust
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ed levels, they're really not at an all time high. maybe the s&p 500 will be up conservatively 10% this year. i want to put a conservative focus on that. i feel much more optimistic this time than last time. >> let me get to the nuances behind what you're kbpting for the markets. it sounds like you're optimistic. you think the markets are on firm footing. at the same time, are you a buyer of materials? of industrials? of technology. are you the bull who sticks with what has been working? >> well, i'm neither, actually. let me tell you how i look at things, melissa. i look for themes in certain sectors. some of the things are u.s. based companies because of what's going on overseas. but also you have to look and
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see if there's certain features of the company. so i'm really excited about dividend increases, stock buy backs and spinoffs. if you can find companies with one of those properties, that's great. a home run is to find a stock with all three of those properties. but now it's increasing the dividend. it has a billion dollar buy back program. and it announced a spinoff of the llp midstream. >> stewart, would you agree that this is a stock picker's market? it's simply playing the macro themes. >> i still think there's room in the macro market. we're 14.5 times earnings this
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year. probably less than that with earnings out 12 months. if you look at the eflgtss in the entire market, we're one of the cheapest places we have been in about 30 years. these new highs don't mean a lot. they're accompanied by aural brand new higher earnings. but revenues and earnings and cash flows are all better. >> thank you for joining us. we'll see what happens this afternoon. and peter anderson. thank you. >> thank you. >> let's now get to the developing situation in europe. the chief international correspondent is live in cyprus where the government and the central bank are working on an alternative proposal to avoid bankruptcy. in moscow the finance minister meets his russian counter part to discussion a loan from russia.
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i want to check in live in cyprus for the latest on the situation there. michelle? >> hey there, melissa. yeah, right now it's a waiting game. we're waiting to hear what the president says. there are reports they did bring some plan "b" and it was rejected. the people that would have to give cyprus 10 billion yoeuros come up with a plan. what do they do with the banks? the the banks are still closing. we see people constantly at the atms because there's a cash shortage within the economy because the banking system has been shut down for days. and it's possible it could be closed for the rest of the week and possibly into next week. they haven't said what they're going to do tomorrow. a lot of experts think it would be suicidal if they were to open tomorrow without some kind of
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plan. the other thing is the continue ou blame game about taxing deposits. we sat down with the head of the local group of certified public accountants. i said, listen, you're an educated guy. you must have had a lot of wealthy clients and business people. here's what he said. >> all the assurances they get from european officials was that their deposits are not at risk. there may be other need for additional taxes for significant government cuts. the loans actually supports their banking system. but there was never discussion
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of any cut on depolisitsdeposit >> in other words, they were expecting traditional types of austerity. when we have more news we'll get it to you. >> let's cross over to moscow with steve sedgwick. we used to be colleagues in london for a long time. i know you've done a lot of reporting in moscow. isn't it the case that the russians will string the cypriots along here? they will get much more if they need to when the banking system collapses if that's where we're headed. surely. >> yeah, simon, you make a very good point. there's a lot of people thinking, what's the gain? they've already let the money back in 2011, they led with 2.5 billion euros. so extending that and the term on that, reducing the interest rates and giving them an extra
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loan, what's in it for the russians unless they get future energy rises? a lot of gas developed offshore as well. spoke about the talks between the russians and the cyprus. it's the only people who we spoke to today. >> in terms of that support, are we talking about a change of terms for the current existing $2.5 billion loan and an extension in addition to that? >> we are talking about things beyond that. >> in what way is this beyond that, sir? >> we don't know yet. we don't have any details. we just continue the discussions, and they are waiting for us now to continue the discussions in another place. >> and how long will the discussions last? >> for as long as it takes. we will be here until we get some agreement. >> i don't want to scare anyone wut of their long positions today and by all mean, buy
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stocks on fundamentals, but this one would blow up. they think the cypriot have only themselves to blame. it may be 0.2% or 1% of the gdp, but it's very important for the likes of russia. a quarter of a trillion dollars worth of inward and outward flows of money. if there is a moratorium on debt repayments, that could block $53 billion worth of debt repayment back to russia. who says it will be contained just with cypress? >> but i'm not sure the russian government or more accurately the kingdom has skin in the game. this is dirty money that should be in russia itself. let's nail one thing, steve. the idea that russia may have a naval base in cyprus. cyprus is part of nato. that isn't going to fly. is it?
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>> reporter: no, simon. last time i looked, and you know this as well as i do, the british army is based in cyprus. a big plane flew in earlier this week to take a million euros in cash to cyprus so the british servicemen and their family can afford to pay their bills and buy their groceries and what have you. putting a russian naval base in cyprus would see incredulous. and we're talking about an eu country, simon. we're talking about a country in the euro zone that uses the euros the same as the french and the germans. given the enormous amounts of deposits of the russian companies, individuals and banks have in cyprus, wouldn't it be smart to turn around and say let's bring the russian ngs on this. we may not have seen this situation. who has their 100,000 euros plus
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in their deposits? it's the russians who put the money offshore. >> good to see you again, steve. you're looking well. >> thank you. simon. >> up next on the program, a samsung executive is speaking out about the latest product announcement. and it has nothing to do with smart phones. find out what hoost he's saying. plus, blackberry is spiking higher on news of an upgrade. one analyst says you should still sell the stock. rick santelli is watching the markets and the feds in chicago. >> absolutely, simon. i like the conclusions about cyprus. i still think it could be the arch duke ferdinand for europe. let's get other opinions on that and the japanese markets. anybody watching these rates the last couple of days, we're going to do all of that with ira
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harris. be there the bottom of the hour.
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take a look at the s&p industrial sector. up more than 10% this year. there's one stock not helping the sector, and that's caterpillar. certainly missing out own the rally today. josh, what's the story today? >> caterpillar is falling today. the reason retail sales keep dropping. rolling retail sales down 13%
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from machines in the three-month period ended february versus a month earlier when they dropped 4% november through january. ash specifically is bad. down some 21% over the past 12 months. melissa, back to you. right now a few yards from where sooer sitwe're sitting, s rolling out this year's tv line. the president of samsung electronics america unusually -- because they don't do many interviews -- joined us exclusively live in the last hour of the show to give us a first look at the evolution kit that can upgrade your older tv. last year's tv model to this year's tv model. . >> it's really about injecting
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the excitement and wow in the television experience. there's a great deal of that in smart phones and tablets. now we have a new line of smart tvs that allow you to organize and curate content in ways similar to a smart tone or tablet for that matter. >> and tim baxter also holding the company line well. saying they think less about the competition apple and far more about the consumer. >> really we are focused on recognizing the things that consumers wanltd to share content adwosz the devices. 4 doing it regardless of the operating system that the consumer operates. >> we are watching shares of blackberry surging this morning. morgan stanley saying there's room for blackberry as a niche mid range player in the smart phone market and noted a favorable reaction to the
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blackberry z10. our next guest is not so excited. james, it's always gate to speak with you. >> thank you. >> i'm always fascinated with the analysts. some are only helpful if you're going to sell the parts. but at this point when we look at the morgan stanley upgrade. part is assigning no value to the markets and the notion that the device part of the business will no longer burn the cash generated by the service side of the business. would you agree or do you see cash burn all the way around? most of the designs stem from the idea that they should be able to do three, four, five million units a quarter or more
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of high end devices with 30% gross margins. what we're seeing right now is nowhere close to those kinds of volume ls. the mention of a strong launch in the uk in in canada. we see the price entering into the equation there. and if you start to cut price and you're not doing volumes. i'm curious when you came to this the underperformed rating on the stock. i want to understand if it has to do with the big run on the shares. obviously it's a marriage of the two on the stock. it's up 30 pk or so today. >> i think that just adds to it. we have it unperformed for quite a while.
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we felt we have in the naturalization phase. and for us we continue to see the maturation. while interesting on serving purpose in the past really don't have a lot of future. so we look at structurally the industry's challenge and on top of that, the things blackberry is doing while making an honest and good go of it ultimately won't allow for much value. >> if terms of who ultimately wins the share of blackberry that is perhaps up for grabs, we always talk about apple being the competitor to blackberry, but is the samsung gaining here? could it be the nokia? >> well, clearly you're seeing android come down in price. that's having an impact. the high irend user base, you
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have iphone and android eroding. windows hasn't had much of an impact. it is nibbling around the edges. >> james, thanks for your time. >> jamie dimon used the to be wall street's blue-eyed boy. not so much anymore. more on that when "squawk on the street" returns. [ male announcer ] i've seen incredible things.
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dowthe the dow is up 62 points in fm. jp morgan is attracting a lot of attention, though. slightly more negative attention than many of the stocks rallying today. we have more on jamie dimon and many people are talking as a slightly battered and bruised image. >> a year ago it seemed jpmorgan could do no wrong, but it seems
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the headlines are incessant for the company. a month later they dismissed that. in june a scandal was exposed involving the manipulation of interest rates benchmarks. jp morgan has yet to be charged by regulators. last fall as the board was putting together an internal report, the new york attorney general sued jpmorgan before the firm was rescued by jpmorgan. the board in january decided to half dimon's pay. add to that, 17,000 layoffs announced on investor day as well as reports detailing the vulture lenders and foreclosing on veterans. when asked about the outfits specifically, he called it in horrible practice and said they were ceasing it. they announced that today.
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today the bank is in the crosshairs of the global bankruptcy settlement. the headlines today will get drowned by the fed. the regulators are unhappy with the bank's operating style. a senate report released friday shows a rare downgrade of the crucial confidential management rating at the occ due to the whale trade as well as auditing concerns. carl levin's charge to regulators to get america's biggest bank on the straight and narrow. >> when you talk to investors, they rarely state the reputation of jamie dimon and the controls as a reason to like or not like the stop. >> it is interesting. the whole thing was called a theater of the observe. still employed 250,000 people and lends a boat load of money to corporate america and beyond. we'll see if this reputational damage gets sustained, though.
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>> kayla, thank you. well, markets in rally mode ahead of today's meeting with the dow. the dow hitting a new record high. for the eighth time this month, we'll get a preview of what ben bernanke could say today and how he should play it right now. breathe, and how that feels. copd includes chronic bronchitis and emphysema. spiriva helps control my copd symptoms by keeping my airways open for 24 hours. plus, it reduces copd flare-ups. spiriva is the only once-daily inhaled copd maintenance treatment that does both. spiriva handihaler tiotropium bromide inhalation powder does not replace fast-acting inhalers for sudden symptoms. tell your doctor if you have kidney problems, glaucoma, trouble urinating, or an enlarged prostate. these may worsen with spiriva. discuss all medicines you take, even eye drops. stop taking spiriva and seek immediate medical help if your breathing suddenly worsens, your throat or tongue swells, you get hives, vision changes or eye pain, or problems passing urine.
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let's let's check in with bob with a loot at what's moving right now. >> despite the uncertainty, we're not far. that's the closing high on the
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s&p 500 and just inching towards it every day. no new highs here. you'll notice the transports are declining because of a 5% drop in fed-ex. that doesn't worry me as much as caterpillar. i want to highlight what's been happen because the numbers are alarming that caterpillar reported. they do a three-month rolling number of their sales. their division was down 13% ending in february. asia pacific down 26%. what? the chinese new year was in january of last year as opposed to february of this year. i sympathy that's the reason for such a dramatic decline. people were simply away. it was a holiday. big problem is we're seeing construction sales decline a little bit. that's the main division as well and of course the mining division has been terrible for a
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couple of years now. sales peaked and have been sort of on the dropping side since then. that's one of the main reasons we're seeing caterpillar as more disappointing. we have great numbers in the housing market. new orders up 34%. again, same great numbers we have here. the stocks are all up. the problem is the eflgts. that's historically very high. hard to push these forward. all the good news is already in a lot of these stocks. i just talked about solar this morning. sun tech is one of the first big companies. effectively the stock is worthless and who knows what's going to happen with the bondholders at this point. finally what was going on tw the
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ipo this morning, that's a model end that does business software for the life sciences. $20.30 is where it opened. the important thing is where we were in the beginning. priced at $15.50. look at that. at $20. these rb very succ have been ve. >> this is very small though. 6.7 million. >> thanks, bob. >> this afternoon you could really see some of the commodities in gold shift on what the fed has to say. let's check how we're positioned going into that. sharon epperson is live. >> a lot of traders are certainly waiting to see what the fed says. and that's going to this be a big data point for the commodities overall. in terms of energy prices, we're continuing to watch them digest the information about weekly supplies. we keep talking about the surge in oil production really playing out in the weekly numbers. yes, we did see a decline in
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weekly supplies but supplies are still 10.5% above where they were this time a year ago. partly was because of a decline in imports. and the energy department is now saying that this month we're likely to see crude oil production on track to pass imports for the first time since 1995. meanwhile, in terms of the gasoline market, we have seen a whip saw action in the futures market. yes, we saw a decline in gasoline supplies. and in terms of gold, and that is commodity to watch this light of what the fed may do. we are lower on the session. we'll see if they are able to gain ground. it depends on what happens this afternoon. back to you. >> traders across all sides anxiously awaiting today's meeting. let's get to rick santelli in chicago. rick? >> thanks, melissa lee. we're definitely going to talk
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about the fed. let's talk with cyprus and so many issues. we could talk about the russians. we can talk about jgbs. how about all three? take it away. >> to me the cyprus situation is very doable and i would use the format that ruben did in '94 and '59 with the mexicans. they are going to clat rise this with the gas field and whatever else. that was the smartest thing that bob reuben ever did. that mexican loan from the us was paid off. it was totally collateralized by the market. you can work this out. this was really a bone head thing, end of story, that need ought not to have been done. >> let's take a detour. let's go to russia. >> this is geo political.
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and what they have done by this bad decision is invited russia to this the gape. as others have pointed out, you know, there's some naval ports that the british have held in cypress. watch what kind of deals the russians try to make here. >> this little thing -- this little -- >> jgbs are making all time highs. >> record all time highs once again ch if you're looking for a dose of morality or reality the markets are not actually the place to look. let's switch gears to the fed. we have fed day today. you think anything will change? is qe going to be the final four? >> i don't know what we're going to hear. to me the most interesting thing is jeremy stein's vote because
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his paper that was delivered about three weeks ago which has countered to a lot of people on the fed will find a lot of comfort if jeremy stein votes against any type of program. the situation with cyprus may be backing him off. >> when i walk by the chicago feds, which is every day to the train, i see the garbage bin tilled with shredded there stein's reports. simon, back to you. >> i love him. rick santelli in chicago. you know flights seem to be getting more and more crowded. yet, airlines are pushing to add seats ha lie flat and take up more space in response. you can guess why. that story is next. and later the ceo of landry's restaurant will join us next.
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find out about his view of the economy and his view of atlantic city as we await a fight for bankruptcy in the next couple of days. ♪
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the bernanke bump? going global for growth. we tried to say. a top fund manager gives us the next big play. pete takes on john. simon and melissa, i know you'll be looking forward to that. >> you bet. >> if you're flying soon, expect it to be crowded can planes packed and airlines willing to pay more, airlines are going further to win over high paying customers. the story sure to infuriate many fliers out there. >> i think it's going to infuriate the people counting on an upgrade to first class. united this week is bringing back the ps service on flights between the two hubs in los angeles and san francisco and the hub at jfk new york. these are live seats in business
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flats. united has stripped out and used fewer seats for the business class in hopes of getting more revenue. what are we seeing with the airlines? all of them are moving in this direction. they're adding premium service because they're targtding corporate customers in the entertainment industry, financial services, industries that will pay for that extra service. >> united will have fewer premium cabinet seats in the new configuration. delta has only 16 premium cabin seats. american's configuration is unknown. they are trying to right size the number of seats with the number of people who will pay for it. >> and hopefully for the airlines more of a profit yield per airline. this is at a six-year high. it's up again today.
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most stocks moving higher today. we're going to see this on a number of routes wean the west coast and east coast. >> phil lebeau, thank you for that story. now to shares of fedex. brandon is a transportation expert that joins us with his take on the quarter. great to have you with us. overwaiting shares of fedex. are you willing to give fedex a pass? >> thanks for having us on. it's really challenging environment right now. what we're seeing is the retail economy is not doing that well. so fedex is having a tough go in the near term. it sounds like we'll get more aircraft retardants out of the fleet. that will be good for the cost structure.
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traffic up 20% this quarter. the ground business was up 10%. so doing very well if we can shrink the air fleet it becomes a much better story. >> you can shrink the air fleet, brandon, but it will have to contend with the fact that consumers, and fedex and ups talked about this in january. consumers are choosing cheaper ways to ship. they're willing to let things ship over a longer period of time. maybe longer in terms of the type of air they choose. and so i'm wondering if they're doing enough to combat the secular change in the business. >> well, that's a real criticism levied against the company. they have a really big ground work. and i think investors have excited about that. but we need a lot of aircraft for overnight dplifrry.
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be it domestically or from china. so i think investors are looking for them to get aggressive on reducing cost in the express network. so i'm encouraged that we're moving in that direction. and we want your opinions on the railroads out there. you mentioned the retail economy not necessarily supporting the fedex and upss of the world. are we seeing the same thing happen or the opposite happen on the railroads? is there enough to keep this run going? >> well, the railroads have a little bit different outcome because of all this domestic energy and the oil coming out f the ground in western u.s. it's really creating a reindustrialization of north america. we're seeing a lot of manufacturing in new mexico. it's very heavy industrial traffic that's being generated right now.
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that's outperforming the retail segments. so i think there's a pretty solid case for investing in railroads going forward. it's the retail that we hope can get picked up later. >> brandon, thank you for your time. >> thank you. we're losing traction on the dow. let's get a market flash with josh. >> hey there, simon. check out first solar which is rising this morning. the reason, china's sun tech power holdings declaring bankruptcy. you heard our own bob pisani talking about that earlier. so now the possibility of some capacity disappearing is getting investors excited about first solar. also analysts telling me, remember that a big promise chinese banks propping up solar companies. companies that would never have a chance of making money, so investors now think that industry dynamic may be changing. up more than 4% right now. simon, back to you. ahead in the program, landry's owns some of the biggest driven consumer brands
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in the country. from bubba gump shrimp to morton's steak house. they own it all. the chairman and ceo who took the company private will join us live here after the break to talk about splitting the state of the economy, the consumer and much more. our big interview on cnbc. carfirmation. only hertz gives you a carfirmation. hey, this is challenger. waiting for you in stall 5. it confirms your reservation and the location your car is in, the moment you land. it's just another way you'll be traveling at the speed of hertz. has an equally thrilling, lesser-known counterpart. conquer them with the exhilarating is 250. get great values on your favorite lexus models during the command performance sales event.
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and and we're just hours away from the fomc statement this afternoon and fed chairman ben bernanke's press conference. we are losing traction with the dow up by more than 50 points. the s&p up by 7 1/2 and the nasdaq feeling the pressure by shares of apple which is down 0.8%. but the dow hit the eighth intraday record high in today's session. let's main line into the state of the consumer from dining to hospitality, landry's is one of the largest privately held restaurant, entertaining and gaming groups owned it has to be said ostensibly by one individual. they own golden nugget hotel and we have the owner and the ceo of landry's. >> good morning, how are you today? >> good. you have a huge group here. how many outlets, is it 500,
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600? >> 500 all together. >> and various price points. what are you seeing at the moment? >> it is really interesting right now. since everybody got hit with the $2,400 that the administration forgot to tell everybody -- >> the expiration of the payroll tax cut. >> absolutely. but it's mainly the lower price points that are hurting right now. more in january and february. the higher end is still holding in there. just when you start talking about an $80, $90, it's gotting to affect somebody, but somebody on a $20 to $30 it will affect somebody. >> how have the restaurants adjusted to offset this? >> it was the sticker shot to everybody and everybody felt it in january and then by february, everybody pulled back a little bit. but then you had horrible weather in february. gas prices spiked at the same time. and so march is coming back a
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little bit. but nothing like a few years ago. i mean, everybody had 3%, 4% down. >> what we really need is for you guys to invest, to prop up some of the up employment. where are you on that? >> i mean, we're building and growing and hiring every single day. and i still think that you're getting close to that point now where you still have a segment of the population as long as the unemployment benefits continue, why is somebody going to go out and get a job? they keep extending them as a stimul stimulus, but when you reach a certain point of wage you're better off staying at home. we have to stop the continuation of the unemployment. >> presumably that trap will be removed if they institute a higher minimum wage. >> if -- >> because you'll pay more and it will be advantageous for them to be in the work force. at least some of your work force. >> sure. but at the same time, if they do some of the crazy things they're
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talking about doing with minimum wage, we'll all be laying people off and you'll see unemployment at 12%. i mean, because you're seeing crazy numbers out there. look at how many consumer businesses go into and out of business. you're talking about raising a minimum wage from $7.25 to $15, and somebody said yesterday $22. >> how is health care reform impacting your business? how much of a cost? >> it is scary, because now they're talking about hitting us with a fee for a start-up. and you have a company like mine that has 50,000 employees, and so if something is not done as an adjustment it's going to cost the consumer a lot more to go out to eat, lunch and dinner next year. >> but to be clear, you'll likely pass that cost on in prices as an industry rather than reducing employment? >> that's what we would like to do, but at the same time, you might have to re-engineer your scale where you -- so many people don't get to work over 30 hours a week. >> sure. >> because that's the -- you
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know -- >> before we let you go, we really want to talk about the fact that you were taken private three years ago. you were taking off the stock market. why did you do that? do you think the business is in a different shape than it otherwise would have been? >> we didn't have to look at quarter to quarter. i was able to grow the company, do lots of acquisitions from bubba clump, to mccormick's to morton's and grow them long term. and didn't have to worry about what is this quarter's numbers, and when you reach our size hitting the capital markets is just as easy. they don't look anymore. >> are you doing that -- i mean, you're an empire builder, clearly. with the new properties you're opening, are you tapping the very favorable rates that you have in the markets? >> absolutely. >> borrowing as much as you can at this point. >> yes.
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yes. there's more money and more deals out there than what you know what to do. >> when will you come back to the public markets? >> never. >> how will you exit then personally? >> i don't ever plan to exit. >> he's only 55, simon. that's a little bit premature. >> it's a privately held company. what i might do is i might take a brand and go spin it out and take it public. but to see landry's the company public again i don't see it happening. it was a great 20-year run. don't get me wrong. >> need to see you, sir. it is not just cyprus having some problems abroad. find out which country's parliament broke out into this brawl. that's next. [ kitt ] you know what's impressive?
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