tv Squawk on the Street CNBC March 21, 2013 9:00am-12:00pm EDT
at a hertz expressrent kiosk, you can rent a car without a reservation... and without a line. now that's a fast car. it's just another way you'll be traveling at the speed of hertz. stock of the day -- oracle. the company blaming its sales force. yep, the guys -- i think that hurts. salesmen need to be managed. >> we talked to that analyst today who said this may and buying opportunity because it just gets pushed into the fourth quarter.
sales aren't gone, they just didn't -- >> but it wasn't macro, they said. rapidly expanding sales force. andrew is back with us as well. you get rid of the bong, andrew? did you know it looked like a bong? >> i do. i got rid of the bong. it is right here. you had asked about the morals clause if my contract. i actually got my contract since the show begn. it says that i can be fired for the following reasons. if i am involved in the commission of any act or involvement in any situation that brings you into public disrepute, contempt, scandal or ridicule or otherwise shocks, insults, offends the community or a significant portion thereoff or reflects unfavor aby upon you or cnbc. >> don't we do that every day? >> you have to -- >> i think we're all in trouble. >> first, shout out to andrew. my wife went to tulane. big new orleans fan. i think what you said earlier,
the thing to watch -- germany manufacturing was down. 50% of their gdp is exports. if germany slows down, cyprus will be a non-event for the eurozone if you have germany slowing down. >> robert, thank you. thank you very much. andrew, i think you're off today. you staying in the big easy? >> i am. that's why we needed to read the morals clause. yes. i'll see you guys on monday. >> go get some more dollar bills, andrew. right now it is time for "squawk on the street." ♪ happy thursday. good morning. welcome to "squawk on the street." i'm melissa lee with jim cramer and scott wapner. let's take a look at how we are starting on the u.s. futures. looks like red arrows across the board. jobless claims came in at 336,000, below expectations. on the s&p we are just points away from record closing highs.
we'll be watching that today but we do have a lot of economic data on tap ahead. philly fed, lei, existing home sales out in about an hour. in europe stocks are down the most in three weeks as pmis for germany and eurozone disappoint. the cyprus situation continues to develop. we'll have the latest in a few minutes. overnight in asia, shanghai with its biggest gains in about two months. our road map this morning starts off with the markets. the s&p 500 within striking distance of its all-time high. will today be a day for the history books? the fed could begin to taper quantitative easing. sigh krus now under did he line. the european central bank wants the island nation to come up with a plan by monday. oracle this morning under pressure after an ugly report last night that says its new sales force is to blame.
mark hurd may be up for a job as ceo of dell. liullululemon says its see-through pants problem is over. dow coming off a day in which it will set an all-time intraday high. yesterday ben bernanke said the central bank will continue purchasing bonds each month to support the economic recovery. jobless claims rose slightly in the past week but the four-week moving average did fall to a five-year low. there will be more economic data from wall street today. in about an hour, philly fed, existing homes and leading economic indicator. let's take a pause to digest all of what's going on. >> there are two economies here. kb homes, lennar, sherwin williams, whirlpool. there is the economy defined by
fedex, by caterpillar and this morning by yorele cal. i was on the call last night. the cisco downgrade today. this dichotomy is allowing i think bernanke to not have to taper off. at the same time it calls into question how weak is that international market. seems very weak. >> did we get largely what we wanted from the fed yesterday? there were no big surprises within that. >> no. i think that was the point to not have any big surprises. i think there was a poignant moment yesterday that i think wasn't talked about enough where someone asked imputedly, i felt, because ben bernanke deserves better -- do you know anybody that's unemployed? do you note price of a gallon of milk? he came back, yes, i have a relative on unemployment. he's going to get unemployment down then we'll talk about tapering. until then we are playing a parlor game with the fed. i believe bernanke when he says
these things. >> there's no reason to believe the fed is going to start pulling back any time soon. >> no. >> we need to see sustained improvement in the employment picture. then the tapering, who knows what that could be. it is not just turning the spigot off. it is a matter of how much he closes it. it could be a very gradual process that will most likely be very well telegraphed way in advance. >> 1934, 1937 we had tremendous growth in this country. we had unemployment almost cut in half. we had industrial production. gdp growing at 12%. the president, congress, they decided to raise taxes on the wealthy, put through a payroll tax increase, entitlements. we've got two out of three going. we had the president and congress raising taxes on the wealthy. i don't think bernanke wants to be the fed of 1937 because the recession came back aggressively and it was only world war ii that made the hiring come back. he doesn't want to be the guy -- he'd rather be second-guessed by
all the bears who come on and say he's got to tighten because my short positions aren't making any money. he's not responding to the people who are short. he's actually responding to the american people. old-fashioned kind of guy. >> in terms of the reaction in the markets after the ben bernanke news conference, was that surprising at all that, for whatever reason, for whatever he said, the markets managed to rise and actually reached the highs of the day afterwards? >> i think there were a lot of people who expected that he would put in some language that just says, we're not going to keep rates low indefinitely because we see real estate, affordability is fantastic. you pick up the front page of the new york city, there's a housing short animal. he could easily craft a story around housing. but i'll craft a story around fedex and caterpillar and oracle. >> which is even more impressive in the face of what the marked did yesterday. on many other day you get a fedex or caterpillar, you market may take it a turn negative.
instead it added to gains. >> i am surprised at the resilience of the market yesterday. i think we all were sitting here on set. we got the indication from u.p.s. in january that this was the case with fedex. when it comes to pat pillar, its retail sales numbers have not been extremely strong. we heard sentiments echoed through various downgrades and various other players in the market. but when oracle comes out and misses so soundly across the board is what really rattles the markets. when a company that's known for its execution fails on all fronts -- we'll get to this in a minute. >> it is hard not to, right? they threw their sales people under the bus. >> under the bus. there are some real questions this morning as to some of its lines of business, most notely hardware, cloud business, things that were supposed to turn, the things that were supposed to be the high-growth businesses, it's not coming through at least last quarter. >> they do have the new spark
t-5 micro. larry ellison was saying, this is -- not this quarter but the next quarter is going to turn. 4,000 new sales people. talked about the acme packet. a couple guys go from buy to sell. but this is one where people say the overriding economy must be so weak they didn't take that bait. i agree with you that this stock has had -- it has not been perfect. i think deere, caterpillar are buys. i think oracle will be a buy. i say that because the market is incredibly forgiving here. let's use the most benign stock i know. mccormick spice. cuts from $67 to $61 on a hideous quarter. the company says absolutely nothing. then it is at $71. this market reinvents reasons to buy stocks. fedex warned $89 to $85. then reported disappointing quarter, stayed at $85. then next you know it is $109.
the market is a living, breathing bull market. and i think that cyprus, the bears -- i'm bombarded constantly by bears. i mean cyprus, they made cyprus sound like bare aear and lehman. a guy yesterday -- >> talk about crying fire in a crowded theater. >> you could say it is washington mutual. don't say lehman. lehman came in that day, first thing you think of is, can my company meet the payroll. is the atm going to work. that's cyprus. >> but in terms of the markets here we were at new intraday record highs on the dow jones industrial average from its all-time closing high. at this point knowing that monday is the drop-dead deadline, supposedly, for
cyprus, isn't that a reason, i'm stepping back a little bit, i want to see how this thing unfolds on monday because monday could be the day. if cypriot officials say monday they have to come one a plan, otherwise these emergency liquidity programs are going to come to an end but monday is an important day for the markets. >> i think one of the things that's happened is the old days we were down in sync with europe and that could happen for that morning. now i say kimberly clark is too expensive and clorox is too expensive and general mills is too expensive. then i'm instantly wrong. >> i'm thinking of the headline of the paper over there. draghi to cyprus -- drop dead? >> most americans don't know draghi. they don't know where cyprus is because it's been forever since they took geography. the home market is still bigger than -- i know this is going to sound counter intuitive.
but jpmorgan is bigger than cyprus banks. every day something bad happens at jpmorgan. i actually believe in jpmorgan. i just think this is not 2008, 2009. we already had a collapse here. anknow that the desire to say that because cyprus made the depositors potentially have to take a haircut, that means the whole world has to take a haircut. i will point out that in 1918, lennen kill every single member of the royal family and killed most of the rich people in russia and we didn't. so it is easy to try of like, wow, lenin killed them all, i guess that will happen here -- it didn't happen. >> it is probably worth mentioning the context of the conversation, bear, lehman, jpmorgan -- >> and lenin. >> -- and lenin. five years ago this last week is the five-year anniversary of
bear's demise. you see how far we've come. it also helps you put cyprus into context. like that back five years ago, that was hell for a lot of people. and in the markets it was hell. cyprus? i mean -- >> look. i was talking to my friend dan dicker. he does energy stuff. we were saying the find of natural gas, the buys and finds, the largest in the world -- noble, nbl, and cyprus, they own it. this is perhaps the way europe can end the chokehold of a russian natural gas pipes that can be shut down. is this europe? say, i'm going to give you a little geopolitical thing here. >> i love it when you wax geopolitical. >> you like that? this is central europe saying, you know what, russia? we're done with you. we'll take the natural gas and shut you down and the russians i think want this natural gas. i think at the end if it goes to the russians, then that's what this was really about, russia
versus the west. is like nato! what are you like nodding. are you like faber? whatever i say, faber's like -- >> whoever sits in that chair just looks as you with a smirk on that face physically. >> i will say it could be gaza g gazaga, duke, louisville -- he'll be -- >> possibly. possibly. >> famous faberism. >> you look askance, you put your arms -- >> channel my inner faber. >> he makes calls! >> while we're talking he is making calls. that's how he is. >> maybe he's watching right now. >> probably not. i hope he's not. he's on vacation. ipo action returns to the big board today.
it is aviv reit making its debut. >> is that a tell? >> it is a tell. >> tel aviv. >> we'll bring you the opening trade and we are going to talk to the ceo of that company as well. next hour buffalo wild wings ceo sally smith on the state of the consumer and her restaurant chain's game plan for big business during march madness. let's take another look at the futures as well. the markets are set to open on this thursday morning -- there you go. an implied open. little bit lower for the major averages. [ male announcer ] i've seen incredible things. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪
shares shares of oracle down sharply in the premarket. the business software provider out with quarterly results that missed wall street forecasts. revenues were hurt by a decline in software sales and subscriptions, meantime, oracle president mark hurd is in the spotlight as well. publishers say plaquestone has approached hurd about running dell. currently set to be bought out by co-founder michael dell and pe firm silver lake partners for $24.5 billion. two issues here, first oracle earnings as we all know were bad. but blaming what they say sales force execution issues.
>> had nothing to do with salesforce.com execution issues. >> we got $33.4 billion in cash. they bought back 61.5 million shares this quarter, 350 million shares over the last year. $10 billion. the street, one guy goes to a sell. look, it was not a great quarter but i keep coming back to this idea that every single break in any company that has decent balance sheet is huge. hewlett-packard. best buy. bed, bath and beyond. listen, they put a stock on sale, people find a reason to buy it. >> when you look at some of the various business lines very disappointing. licensed cloud subscription sales were down. one analyst saying the cloud business is too small to compete. hardware was -- just terrible,
terrible result there. down 23%. flat versus the previous quarter. you marry that with what the company said about hardware and when they expect that to turn which is later in the fiscal year and you have to question whether or not the company will be able to meet its targets and whether or not that acquisition is going to finally pay off. that gets pushed out into the future. >> you disagree with the sell call though. >> look. logically -- if this market had had justice, this stock goes to $29. but there has not been justice which is why i think on monday you buy the stock. remember, thss -- one of the things we've learned about this market, it is not a court of law where we like have a prosecutor and defense attorney and they duke it out and then we put. stock in prison. there's like -- we have furloughs -- >> i'm the judge. i can do that. >> i've been calling you the prosecutor lately. but look, there's no grand jury here. thernono grand jury. there are no indictments. there are no convictions.
and that's the way this market works. >> i may have a bench trial on this later where i just -- >> i'm going to get a permanent injunction against the sellers. people want to have justice. but fedex should be at $70 if there's justice. caterpillar should be at $70 if there's justice. no, it's not like that. like the bears, cyprus, they have atm problems. jpmorgan should be at $40 because there's justice. there is no justice! >> marry this with this story that's been reported that private ecwift firquity firms ag at mark hurd. does he bring the same hurd premium to a dell that he had brought to oracle or wherever else he went? >> there is such a thing as loyalty. it would really and terrible time -- if he leaves, that's a real -- hey, mark, if you leave, that's a real bad call. >> i would agree.
>> we speak to mark. hey, mark -- >> it would be like jumping ship. >> yes. >> what if the "hurd" mentality is dell. i just thought of it literally. then hello, hewlett-packard, you want to have a little battle royal? >> dude, don't get a dell. i personally feel that hewlett-packard that was another one of those stocks that got to 14 and nobody like it. i think mark hurd should stay at oracle. that was just a terrible. you got a new sales cycle. he's in charge of the sales cycle. you got 4,000 new bies in there. >> benny, open bear season on that guy. he's using crossbows. he's using ak-47s. >> wow.
>> assault ban is mostly for benny out to shoot the bears. >> let me ask you quickly because tomorrow is the end of -- >> what's with the pocket square. you are cool as all get-out. >> channeled carl quintanilla. >> the go shop things end tomorrow for dell. >> i'm not going to stop shopping because of that. >> i'm going to go right to lululemon. i think the dell is a sale because the upside seems very limited and the downside seems, to me, unfathomable. coming up next, stocks that are worthy of your attention. take a look at futures once again, points away from the s&p 500's all-time closing high. looks like we are going to open lower across the board. much more "squawk on the street" straight ahead.
with fidelity's new options platform, we've completely integrated every step of the process, making it easier to try filters and strategies... to get a list of equity options... evaluate them with our p&l calculator... and execute faster with our more intuitive trade ticket. i'm greg stevens and i helped create fidelity's options platform. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
it is been great ever since they said no to air -- don't you love this? -- said no to air products. stocks looking real bad today. industrial gases. this would lend to the theory that ben bernanke is right because industrial gas is consistent business being wiped out. deal in south carolina, south of the border. >> isrg. >> herb greenberg's bread basket. >> he is standing up screaming. >> $1 billion repurchase. the shorts are right here. the shorts are playing hangman. it is like, wow, herb -- isn't that perfect. i think isrg will be the short squeeze that is just today's rampant action. >> arg, isrg. got anything on rg3 for me? >> dr. james andrews and i
haven't had our conference call yet. i like to do one before the week. this is a market -- we have buffalo wild wings on. >> the ceo is going to be on. >> person comes on television, the stock goes up. we'll be telling with aviv. i think that's just the publicity of being on tv. >> what's next? >> i just think we're in a moment where if you say something positive a stock goes higher. i'm not kidding. speaking of tel aviv, we're on ipo watch. we're going to talk with the ceo of aviv receipt. opening bell is next.
tens of thousands of people are going to be laid off within the next -- >> or furloughed. whatever it is. >> that's going to show up in the numbers. that 330,000 employment he we had, that may be the last good one. bernanke's not smoking you know, like dope, pot -- i don't know what they call it now. but i do think that he's spot-on. oracle, fedex, caterpillar, the sequester. i think he's got a lot of reasons why -- >> they are adding up, at least for today taking an impact on the market. mostly red. aviv reit specializing in owning and leasing skilled nursing home facilities abuing i iadebuting . we'll speak with the ceo shortly. taking a look here ghob surprise, technology bearing the
brunt of the losses at this early going because of those dismal results from oracle. in oracle's defense analysts point out that such a strong executer they've had one-off glitches. >> it's always come back. again, i want to point out that i think that there's a lot that's not great. it has been the tale of two economies. there's ken pal from general mills on last night. that's a terrific story. but then you come back and you say, well, look, some of these stocks have been up, up, up, up, that are in that group. there's a big goldman piece today about the industrials. they like a bunch of stocks that are again moved una lot. i don't want to be sanguine here. i think there is a lot of stuff that's not good. >> cisco got downgraded, stock is down 3% right now. overall tech issue -- >> goldman's been saying over an over cisco's been taking share from juniper.
obviously there's saying there's no share to be taken. that business is just not that good. oracle -- remember being amy packet, they did that acquisition order to boost. i don't know, if cisco's not doing well why would you want to move big into tellco. >> we mentioned a couple strong reports from home builders. kb homes falling today, down by almost 4%. it was a good report. the order growth was 40% over last quarter but the cancellation rate remain high. it was 30% still. maybe the stock was simply taking a breather after a torrid run. across the board home builders are weak. existing home sales data comes out later this morning. kb and lennar, the most recent to report, are the weakest. >> is a positive housing number today and more focus on that
what turns our attention away from the negative stories in the market today, turns the market away from the negatives and focuses on what's working? >> i think that we're at a difficult moment because technology is such a big part of the s&p. i still think that cyprus, that has to be ploen out blown out o proportion. the quarter has been a huge win for fund managers. hedge funds are way behind the market. they can color with their own sell order what's going on. housing is a big part of the economy but so is government spending. i think government spending is really being ratcheted back here. that's going to be a major focus in the month of april. we'll hear endlessly about government spending coming down. >> the note on oracle this morning, this shows incremental softness in i.t. spending environment. that's weighing on all tech names. ibm is down 1.25%.
that's a huge weight on s&p 500 at this hour. a lots of them we are watching in the tech sector. s.a.p. down 2.5%. crm down 1%. it is taking everything down at this point. >> oracle was bad. can't mince words about it. >> was oracle being bad a sign of what's bad in overall tech spending or was oracle bad more of a sign of what's bad at oracle? or both? >> it is a big government provider. dell is, too. that's hurt dell. this was sloppy execution. deliver, deliver, deliver. are they losing share in the cloud? clearly. they won too many nine-figure deals. at the same time the market says i want to buy that weakness. why is lululemon up? they want to buy that weak fles.
looking for caterpillar to bottom today. onshore drillers, one of the weakest markets, he should buy those. things come down, people just want to buy them. >> do you agree with this 1% move on lululemon today? >> that it is up? no. i don't like lululemon. talk about bad execution. they've just been terrible. >> the ceo making some comments, disappointing time for all of us. still have to see where problem is. >> see where the problem is. >> they're still trying to figure that whole thing out with the too-sheer pants. we don't want to call out individual vendors until we have more information. >> doesn't want to trash the vendors. >> the too-see through swimwear that they had also. >> deal with the boundaries of the market.
people want to want aerospace, they want to own retail. they are looking for entry points at oil at oil service here and at the same time, today tech is going to color everything because tech is hideous. tech is hideous. it's so wig for this economy. >> at least we have the ipo over our shoulder which happens to be right here at post nine. >> i have an angel over my shoulder. >> i like the idea of an angel over my head -- halo? >> little animal house style. >> ooh, i like that. this reit is interesting specializing in owning and acquiring skilled nursing facilities. it's sort of an area of the market in the reit area that you don't really hear too much about the home aspect.
>> one of my favorite ceos, almost a 4% yield. they did a big secondary offer when it was at 5. that stock has been just a horse. this segment is not bad. it is kind of a nice place to be. medical trust. i like these stocks. they're very domestic and there is a lot of consolidation going on in the industry. >> we'll speak with the ceo coming up. after the first trade. let's check with bob pisani who's on the floor with more on what's moving this morning. >> interesting company, aviv. i used to be in the real estate business. aviv nursing home facilities. somewhere around $21 right now. another good ipo. it is 25r7bd $1 right now. we haven't had a reit ipo in a while. it was silver bay back in
december. it was the last one. that did really well. by the way, aviv is projecting a 7% dividend yield. ask the ceo about that. 7%? are they going to stick to that? that is a juicy yield. that will help the company a lot. big story today, what's up with the earnings and guidance? i'm getting a little worried here. look at number adding up here. fedex, caterpillar, a krchctuan. airgas, great industrial bellwether. sales disappointing in february. no improvement in march, they're saying. airgas, entirely u.s.-based company. no, we can't blame it on your. no, china's sales are down. airgas, all u.s. that's a little bit of a concern to me. i call up everybody last night,
say what the heck is going on here? is this the start of a trend here? everybody who says bullish right now. the earnings bar is low. we're only expecting 1% increase in earnings for the s&p 500. one measly lousy percent year over year. we'll give the companies benefit of the doubt but what's built in to the market is the economy is going to be improving and earnings are going to get better beginning at least in the second half of the year at the very latest. if we don't start seeing better indications, i think we're in trouble. these were bellwether companies we were talking about. on cyprus, i think this is a watershed moment for europe. i don't know if the russians are going to come to the rescue or they'll have attacks on deposits. seems like it has to be some combination of the two. one thing that everybody seems to agree on, this is the start of more private sector involvement. private citizens are going to pitch in more to help deal with the loan overhang, the debt overhang, whatever you want to call it.
i don't care if you call it private sector involvement, psi, or bail-ins or whatever you want to call it, this is a bellwether moment. private citizens are going to pay a lot more for what's going on in europe. right now we're still around $21 for aviv. ask them about that difficult den, guys. back to you. >> i like that one, bob. snh, november o snh, another one that yields 6%. rick santelli is at the cme group in chicago. >> i want to read something. notice the markets moved a lot in the last ten minutes. interest rates down, ebb wits down. translation -- it is all about translation. the headline seems to read, russia deputy economy minister cyprus crisis not to be fixed soon to have serious consequences. it sounds a bit clumsy. i want to put an asterisk here. the market jumped to the worst
possible interpretation. but, that is what's moving the markets. now, let's see how much. look at an intraday of 10-year, boom, it moved down rather dramatically. price rallied. bunds. bunds the same way. actually a little bit quicker. you open up the chart on bunds year to date, you can put this into perspective. everybody who thinks the safe harbor fixed income can only sell off, that isn't exactly the case. whether it is the one-off with cyprus. the arch ferdinand moment in history -- >> that's the spot. i can tell you. it still moves markets he pretty good. the currency markets, euro is affected as well, though in the context of its chart over the last 48 hours it wasn't affected as much. looking at the s&p futures, they also showed a very similar move. will it reverse out quickly? i can't tell you but everybody on the trading side seems to be glued to the skreebs that are showing the fastest russian
headlines. jim, back to you. >> we've got aviv open. >> just opened at $22.20. another successful ipo in the reit area. >> melissa, you said yesterday this is the biggest week for ipos of the year. >> eight ipos this week. a lot of it has to do with the quarter end. a lot of companies want to get out by the quarter. also with stocks close to record highs you want to ride that wave. one of the biggest happens next week, that's pinnacle foods. bird's eye, van dekamp. that's one we'll be watching. >> they're like fish sticks and stuff? >> oh, yeah.
delicious fish sticks! >> not my aisle. >> those are hot things. let's check out -- >> you don't like fish sticks? >> not a -- no. >> with ketchup? >> no! like a burger king fish stick? no. no. no. okay? all right. let's check out the latest moves in commodities. >> jim, if you were 7 you'd love them. my daughter loves fish sticks. especially those. we are looking at cyprus at the nymex. all the traders are watching those headlines. it is definitely having an impact on the gold price. looking at gold prices at their highest level since february. we're looking late february and we're looking at the price above $1,660 for the intraday high. a little off that high today. cyprus headlines definitely having an impact. also issues elsewhere in europe, some macro economic issues in europe with flash pmis from france and germany being lower than expected. that's also vs an imact on the euro. the weaker euro having an impact
on oil prices which are also lower on the session right now. story we're going to be watching over the next hour is definitely going to be on the other side of the equation for energy and that's natural gas. natural gas storage levels will be closely watched at 10:30. the expectation is that we're going to see a decline that's greater than we normally see for this time of year. we also have unseason pli cold weather here particularly in new york. scott, back to you. ipo excite here at big board. aviv reit opening up 11%. the company's ceo will pay us a visit at post nine next. also ahead, goldman sachs chief asia pacific equity strategy timothy moe. let's look at this morning's early movers.
celebrating its ipo today, aviv reit. the real estate investment trust specializing in owning and leasing skilled nursing facilities. i am absolutely thrilled to have craig burnfield on. congratulations. do you think your stock went to a premium because you offered 57% yield at the get-go if it opened at $20? that would be the best in the industry. >> there is no doubt we tried to come out with a very investor friendly offering. both in terms of pricing and dividend yield. we think that we'll be more in line with our peers as time goes by but i think investors really recognize we were trying to welcome them as partners and it was very well received. >> you have bought 124 properties with 22 tenants. using the stock to be able to
acquire properties, do you think your stock is going to be a way to be able to get many more properties or is it really just still cash machine and rather do it with cash? >> i'd like to think it is both. we have been a cash machine but we do expect to be a consolidator in our industry. it is a fascinating statistic that there are about 16,000 nursing homes in this country and the public reits only own about 10% of those. there's plus or minus 2,400 skilled nursing facility operators in the country so we think it is really a land of opportunity that if we continue to acquire in a disciplined fashion that we can be a condoll say t consolidator over time. >> you would manl now you are in a sweet spot in terms of very low rates but also the demographic trend in the u.s. requires more homes to be out there. i'm sure they are demanding efficiencies and lower costs. >> no doubt about it. we're coming out of the gate with a very low leverage profile
so that investors will feel comfortable with our balance sheet. we're going to manage our balance sheet in a very conservative fashion. what you're saying is absolutely true. the demographics are overwhelming. the 65 and older population as well as the 80 and 85-year-old and older population are really exploding in this country. nursing homes are in the sweet spot because they are providing the lowest cost, care in the health care deliveryery system. >> another question about your projected growth from a property standpoint. when deborah cafaro took over at an obvious competitor, they are roughly the same number of properties i think that you have now. they now have 1,400. what's in your -- >> what's our bandwidth? >> yeah. >> it's interesting because the largest health care reits like ventos are not really playing in our space. there are very few companies out
that have the years of experience and operator relationship to be able to capitalize on that growth opportunity. so much of our business comes -- our pipeline is generated by our operator relationships and we have a business development team that's out in new markets looking for operators and properties. so we don't have a specific goal but we do think that we are going to be able to acquire a lot of properties with the benefit of public capital. >> that's craig bernfield, congratulations. aviv. terrific job. what do you have on squawk today? >> thank you, jim. here's what's coming up on "squawk on the street." >> what can do you in 60 seconds? looking into legally in 60 seconds. how about critique six stocks. the clock is ticking. are you ready? >> you think we're going to make it? >> i don't know. it is too early to tell.
>> we'll find out when "squawk on the street" returns. step seven point two one two. verify and lock. command is locked. five seconds. three, two, one. standing by for capture. the most innovative software on the planet... dragon is captured. is connecting today's leading companies to places beyond it. siemens. answers. (announcer) scottrade knows our clients trade
and invest their own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company."
it is time now for "six in 60." six stocks in 60 seconds. >> everyone's piling in to mcdonald's. sanchez energy. had them on last night. they pantsed hess in taking their properties. you can buy the l.e.d. lights in home depot for a good value? i think this stock is going higher. >> intel. >> citigroup cuts numbers. seems like it is a daily occurrence. stock didn't go down because of that yield. a very consistent new ipo -- wait. >> toomey products. buffalo wild wings. >> i like afce -- which is
pope popeye's. >> i was thinking about lunch. "mad money" tonight, what do you got? >> this is qlik. this is all about business intelligence software. is oracle an outlier? >> you have bjork on your show tonight? >> yes. what, are you making fun of me? >> no. simon hobbs has a look at what's coming up in the next hour. >> three important releases about to hit trading screens. they could move the market quite clearly. we'll ge the inside track on russian money in cyprus. march madness starts today and of course the ceo of buffalo wild wings. more than even that in the next hour of "squawk on the street." stay tuned. [ kitt ] you know what's impressive? a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel.
only hertz gives you a carfirmation. hey, this is challenger. i'll be 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. we we are waiting some key break economic data at the top of the hour. right now the dow jones industrial average is down by 43 points. s&p down by just about five. nasdaq feelth feeling the brunt of that, down by just 17 points. bank of america and citigroup now trading to the green. bank of america is higher at
$1,283 right now. that's 10 cents away from its multi-year high at this point. microsoft is also trading higher. though tech in general feeling the pain from oracle's very disappointing quarter. oracle blaming an inexperienced sales force but a lot of analysts this morning saying it is a cloud business that are really the problems for oracle. let's gr to rick santelli, breaking news on philly fed. >> philadelphia fed, a march number, at last look was down 12 1/2. we expect down 3%. it is up 2%. 2.0%. the last look at 12.5 for february, the minus number was very close to a number we had in the summer of last year and all of those numbers are pretty close to the lowest levels we've seen since may of '09. we had a bit of a reprieve. good news. leading indicators. a february number is up .5%.
that's about where expectations were. yet our look at january, n now .5%. pretty much these numbers look better than expected, melissa lee. back to you. >> thank you very much, rick santelli. existing home sales for february are out. diana olick has the numbers. >> that's right. existing home sales increased 0.8% to and seasonally adjusted 4.98 million units. that's a miss. the street was looking for 5 million, an increase in 1.1%. i want to note single family home sales which make up 87% of the market were down .2%. condos seeing a big surge, up nearly 9% in sales. they only make up 13% of the market though. inventory, the number everyone is watching, up 10% month to month. still down 19% year over year but that's good news in this report. you have 1.94 million homes for
sale representing a 4.7-month supply. that's the first increase in those levels since july of last year and the first increase in the month supply since april of last year. that's the good part. median existing home price, $173,600. an increase of 11.6%. remember your home did not go up 11% in froois price from a year ago. this is from the median number, a mix in the sales. sales on the lower end are much lower. still investors coming back to the market strong. distressed sales rising to 25% in the market. all cash now at 32% of the market, up from 28%. you're seeing that mortgage issue in there, credit availability. investors coming back 22% of the market. unfortunately, first-time home buyers which we need so much, not coming back to the market. still only 30% of home buyers out there. they shall be up at 40%. sales not as good as expected, inventories are the good part of
this report. >> so if you have to grade it, what grade would you give the data we've just had on the housing market? >> i'll give it a b-plus. even though sales were essentially flat and single family down, we want to see those inventories going up. even though that's a seasonal normal move, we did see supply coming back. we really need supply to come back. >> a lot of data around in a market that's down now 46. to digest exactly where we are, let's bring in the chief economist with first trust advisors and chad morganlander whose portfolio manager with steeple nicholas. >> we're in the show-me stage of this market cycle. we've had this tremendous liquidity run rally.
now we need to get the next leg up within financial markets. >> that sounds to me as if you think we may have a question over the data. >> i mean, look. the data is improving here in the united states. there's no doubt about that. but we need to start to see more of a a earnings driven rally here. earnings -- let's just face it. it's been somewhat lackluster. look at fedex's earnings that came out. oracle's earnings. very, very disappointing. we're going to have to see the earnings start to drive this market forward for the next leg up, the next 5% to 10%. >> brian, how important is cyprus to this market? >> i think cyprus is not as important and anybody thinks out there. cyprus is about as big as green bay, wisconsin. i'm sorry. nothing against green bay but whatever happens to green bay does not mean that's going to happen to the united states. let me take issue with this
liquidity -- >> i just interrupt you. will you nail your colors to the mast here if the cypriot banking system collapses at the beginning of next week and the talk is that cyprus could leave the euro zone. you as the first trust advisor's chief economist will tell people now that cyprus is not important to this snashth. >> i think if the market sells off because of what happens in cyprus or cypriot banking system, i think it would be a buying opportunity. let me take issue with this idea that we've just had a liquidity driven market. the stock market is up 150% from its bottom in march 9th of 2009. earnings are up about 150% from the bottom in march 2009. in other words, in other words, this is a fundamental market and it has been for the last four years. i think a lot of nay sayers will
be surprised -- >> you may say that. it's both, isn't it? the fed has certainly helped the market. >> the s&p in 2002 was 1,550. private pay rolls were 112 million. currently there are 113 million. okay? we're back to 1,550 on the s&p. you can pick a point of a total market bottom and that's great that make your bullish case but we do have fundamental issues instru structural here in the united states. the economy is growing. what i am suggesting that valuations are fairly valued at this point and the federal reserve has provided tremendous amount of liquidity and distorted many risk assets. high-yield bond. no longer high yield. they're low yield. >> i'm going to jump in here. it is fascinating to me as an
outside observer that brian, the economist, is db seems more bullish on stocks than chad, the stock guy. now brian, you stayed if the stock market will pull back you would be a buyer of stocks. but at this point in time right now do you agree with chad that stocks are fairly valued? >> no. i think stocks are undervalued today. we can talk about payroll jobs all we want but corporate profits, corporate profits right now are at an all-time record high. we can throw out fedex and oracle an anybody that might have a bad report, but the bottom line is overall corporate profits are at an all-time record high. that's why this market is up sglp that's a great statement. so earnings per share on the s&p is roughly about 1.02. you have operating profit margins at a historic high but
you have revenues that are dead in the water. what you'll need to see for a more ebullient market in the next 5%, 15% you need to see earnings come through as well as a lot of top-line growth. >> i'm not going to debate anything chad just said. the only thing i'll say is that i've heard that, that very same comment for the past four years. i've also heard everybody tell me that there's about to be another recession any day now, there's another cliff, there's know problem, there's cyprus, there's greece, there's spain, there's the debt ceiling, there's fiscal cliffs, there's all of thee things. yet if you look back at this past four years the economy has continue to grow. it is what we call the plow horse economy. it is not going to fall over. it is going to keep moving forward, productivity is improving. efficiency is improving and profitability is improving. and that's what's been driving
the economy and the stock market. >> one last quick comment, chad. >> it is a big "but." brian is correct that the u.s. government -- u.s. economy's improving. but we still have fundamental issues in the structure of our economy, imbalances. we are not out of the woods yet. we're not in self-sustaining recovery. we need to start to see that to become increasingly more bullish on the financial markets. >> that was really good. you're a good double act. we should have you on more. thank you both. brian and chad. have great days. seven years ago today twitter co-founder jack dorsey sent the first tweet writing just setting up my twitter. since then the media giant has become a staple for millions. it has transformed the way people communicate so what could twitter do in the next seven years?
tweet us @squawkstreet. the market is accelerating downward, now down 67 points. let's get a "market flash" from josh back at hq. >> juniper networks is under pressure this morning. analysts at fbr not fans saying we are the end of an era as routers and switches are set to decline. fbr downgrades juniper and cisco toeon perform. the company's fbr says will become increasingly more challenged here to offset weaker than expecting routing and demand. in the options market, different story. bulls like juniper, calls outnumbering puts by 18-1. >> josh lipton, thanks so much. still ahead, what a hot sauce on your ncaa brackets have in common. the ceo of buffalo wild wings knows and she'll join us live as march madness fever kicks off a little later on today. plus, cyprus. desperately searching for a plan b today. it must find billions of euros
in moscow talks are still ongoing between russia and cypriot finance ministers hitting the wires moments ago, russia's deputy economic minister saying that the cyprus crisis will not be fixed any time soon and will come with serious consequences. steve sedgwick is standing by with the latest from there. but first our own michelle crew c caruso-cabrera is live in cyprus. >> reporter: the situation here grows increasingly desperate. they're down to the wire. cyprus government has to make a decision about what they're going to do. look at the lines that have started to form at nearly every atm of the bank here in cyprus, this liky is considered one of the weakest. they're still able to get money out of the atms in cyprus though banks have been closed all week
and won't reopen until tuesday at the earliest. people in line are quite frightened because they know that this is the weakest bank and there had been rumors about it. it is likely to be part of any consolidation effort is that ultimately is what happened. that's every single day likely to be the case. listen to what one man said. he's been taking out money every single day. >> i just took $1,000. i've been taking $1,000 every day. personally i'm taking this money and cash with me to the uk tonight. >> because? >> because we don't know what the future of our country holds. things are very, very difficult and i think we should have accepted the troika conditions from friday. >> reporter: the troika conditions from friday is what started this whole drama. remember, they said so cyprus, you got to tax deposits in the bar banks and the cyprus government decided they'd tax 9.9% on accounts above $100,000 and 6.7%
on amounts below the $100,000. it's been drama ever since. cyprus frankly doesn't want to tax any deposits because they see it as core to their business model for the country. they get investment here. where do they come up with 5.8 million -- billion euros? the parliament meets later on tonight with the president. they're going to pass some resolution about a solidarity fund. i have no idea what on earth that's going to do for them. they figure out how they can consolidate some banks before thursday or it is going to collapse. let's get to cnbc's steve sedgwick who's live in moscow with the latest there. >> reporter: >> i have to take exception with your previous guest who said cyprus is no more important than green bay, wisconsin.
it is an area that has a quarter after trillion dollars of trade. it doesn't have potentially an issue of $53 billion worth of debt moratorium payments to russia if cyprus does inploed. i think it is more important in many ways. officials say it could be dangerous on many levels. dangerous for rsh companies which hold 7% of their corporate deposits in cyprus. dangerous for europe as well. we've already seen implicit threats on the russians that it may have implications for their euro holdings. certainly that will have huge ramifications for the foreign exchange and what might happen to the dollar if people switch from euros. if cyprus were to fall out, what's that mean for concerns about contagion, for greece, portugal, italy, spain. i think it is insignificant in
gdp of the entire eurozone, the rim effects could be quite big. i've seen the prime minister, mr. medvedev berating them saying they handled it like a bull in a china shop, saying they've basically broken every rule they should have followed when handling this as well. i'm actually having a go at the europeans for taking private property. this is a russian who's saying that and saying it compared with the soviet era. how ironic is that as well? mr. barroso, the president of the european commission, was saying, look, to the russians, don't blame us. we didn't disclude you from all of these discussions. but the russians are still mighty irked about what's happened this one runs and runs and runs. back to you. >> cnbc's steve sedgwick in moscow, thank you. as cyprus turns to russia to
be a potential savior in a very difficult situation we want to give you some insight as to what's at stake from a man who he knows russia well. bill, nice to see you again. for many years you were one of the go-to guys on investing in russia. you were based, in part, in moscow and when your visa was revoked it made the front page of the financial times. your lawyer has died in prison and you are both now facing legal action from the authorities there. but i want to put to one side your personal situation and maybe we can come back to that. with your experience and your knowledge, can you explain to us what this relationship is between big russian money and cypress? >> well, very simply about ten years ago russia took over the cypriot banking system. there's a tax treaty between the two countries and as a result
russian companies and russian money, keep their money in cyprus, use the cyprus banks, keep money in cyprus. cyprus is essentially a part of russia, not really a part of europe. as such there's one other very important feature which is there's a lot of crime that goes on in russia. a lot of money laundering that goes on in russia. it is a place for russian criminals. that's why there is all this distaste about a proper bailout in cyprus where there wasn't in other countries, because nobody wants to bail out a bunch of criminals. >> unless you're vladimir putin. what does he do? vladimir putin is not renowned as being the king who'sphilanth outside of russia. does he he spring the cypriots
along? if you're looking for incentives, the russians can pick up a lot of assets much cheaper if cyprus is smashed at the beginning of next week sglp let's look at this very objectively. cyprus has 1 million people. it is a small little island. what -- let's say russia ponied up all the money, the $17 billion. what's russia get for the $17 billion? it's not clear there's anything all that worth while to get. russia's like anyone else, they're not going to throw their money down the drain. at the end of the day -- russians have even been saying it over the course of the day, don't expect a resolution quickly from russia. i expect at the end of the day you'll see the cypriots accept the offer. >> interesting. you think there will ultimately and levy on deposits. where is the systemic risk greater? in the european union or
eurozone directly? >> i would argue the reason why the russians are so upset they don't want cyprus to come back under the control of europe but statement are they ready to spend 17 billion euros to fix that. on the european side it is pretty obvious. if you start taxing deposits, what are you going to do if you're a depositor in a portuguese or italian bank, you think maybe they'll tax your deposits and not keep your money in those places. this could potentially save the europeans $5 billion today, cost them $100 billion in a year's time when the next run on the bank is somewhere else. it's all so fast moving i don't think anyone can predict. i would predict the russians aren't going to come up with a concrete proposal because it just doesn't seem they have the capacity to do that. >> bill, where are you? your lawyer died in a russian prison pem's still be tried after his death, two appear, as
indeed are you going to be tried from what i read in absentia in moscow. do you fear for your life? >> do i fear for my life. well, what we're trying to do right now is sanction the russians for murdering my lawyer after heeon covered corruption. they were very angry because a law was passed in the united states, named after of my lawyer, to sanction the russians. they've been threatening me. am i going to stop my justice campaign for him because they're threatening me? no, i'm not going to. >> in answer to my question, do you fear for your life? >> well, i'm probably at greater risk than your average viewer certainly but i'm not letting that detract me from my activities. >> good to see you, bill. joining us from hermitage in london. timothy moe is coming up. plus, the ceo buffalo wild
welcome back. super value enjoying a nice pop here this morning. news super value announcing today it completed the sales of five retail grocery banners to a cerberus-led investor group. supervalue still one of the largest wholesale grocery storers in the u.s. the stock up 76% this year. no surprise some analysts telling me the stock shares now looking a bit pricey at these levels. stock right now up about -- near will 6% this morning. a key industry group is predicting that china will overtake the u.s. as the biggest market for business travel within two years. 100 airports are due for completion in china over the next decade according to t inin business travel association with beijing he's airport soon to unseat atlanta's hartsfield-jackson as the
busiest in the world. executive director mike mccormick says american ceos are doubling down on their efforts to grab more of china's $200 billion business travel market because growth at another 15% this year is hard to find anywhere else in the world. >> i think companies in the u.s. are really looking for ways to try to better understand the market and again participate in that growth. it may start with alliances. may start with partnerships, then over time grow into deeper combinations of companies and opportunities. >> in the next part of the show we will take you into china and talk to goldman sachs chief asia pacific equity strategist who is overweight china longer term though he says over the next quarter or so there may be some difficulties there. we want to check shares of oracle which are off session lows right now down by 9.5%. at the session lows this was the worst drop at stock had seen in
15 months. the worst intraday drop since december of 2011. in the past ten years oracle has closed down more than 8% six times. in five of those instances the stock rose by more than 7% three months. so three months down the line it could be a different picture but for now the worst drop in 15 months. >> stocks are almost at their lows of the day, too, down 81 points. some of the stocks you had mentioned, melissa, a little while ago that had turned positive are back negative. caterpillar is one of the only dow stocks that's in the green. coca-cola is in the green as well. that's it. >> one more thing apart from cyprus that we got from europe today which was very, very ba survey data which indicates probably the euro zone and europe broadly is contracting now for a sixth straight quarter. that's why a lot of companies are hurting today. we're down now 79 points on the dow. >> just to keep with the theme here, ibm, close to session lows
right now, down by 2%. we're seeing the oracle impact being felt in the tech sector with the nasdaq down by .8%. across the board, juniper down 3%. all of these sort of in this area -- >> hp's down. cisco's down 3.5% with the downgrade. >> hp raises its dividend and still the stock has sold off. >> any company that dpets any money from big corporations, that's going to be in jeopardy. sharon epperson has breaking news. eia inventory data is out. >> we saw natural gas prices hit $4 for the first time since october of 2011 but now we're seeing prices sell off quickly. latest report from the energy department showing that natural gas supplies declined by 62 billion cubic feet in the last week and that was a decline that's less than what analysts had anticipated.
they were expecting due to the coal weather that we've seen that we'd see a decline somewhere between 67 and 71 billion cubic feet. this bearish report even though we are seeing a decline versus the five-year average, that's greater than what we normally see this time of year. it's not what analysts were expecting. even though we've hit this critical level of $4 just about 340 minutes ago, prices are coming off quickly and we're around 3.92. why goldman sachs' chief asia pacific equity strategist says now is the time for cycl cyclical growth in asian equities. could goldman's top china sector plays. timothy moe, next. just how much longer can the bus count on mr. bernanke and could he sit the brakes a little sooner than you think?
[ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪ otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪
growth growth in china's manufacturing sector showed improvement in march. china's hsbc pmi coming in at 51.7. is the data imply iing china isn its way to recovery? tim, great to have you with us. intriguing note that you put out. 12-month you're overweight china but in the near term three-month, market weight. why is that? >> the issue is the near term is
that we've had the intersection of a number of different forces. simply speaking we've got some concerns about the cyclical outplay in china and there is some issue that particularly domestic institutional investors are looking at with rar to the structural reforms that are taking place. since there is a bit of uncertainty about those in the near term and we had a strong market run in the three months up until the middle of february and a bit of a correction now, the intersection of those forces, the market context as well as the cyclical uncertainty makes us feel that the stock market projects is a bit more balanced in the near term. >> in terms of the uncertainty, some of new property policies to cool the property markets -- >> correct. >> as well as lack of stimulus that's going to come from the new people's congress and things like that? >> correct. just quickly running them off, we had the natural distortion of the chinese new year effect which for viewers who may not be familiar is really significant. china pretty much goes on holiday for that entire week. the actual holiday varies according to the lunar calendar.
you get year on year distortions in the data. you have to look at january and february together. that's one. two, we had very hot aggregate social financing numbers in january so the pboc, central bank, looks like it tapped on the brake a little bit in february and in march. we've had some of those policy distortions, properties, but also a clamp-down on excessive spending. retail sales have come down somewhat but it is hard to read from that data whether that is an underlying issue or whether that's something that is just a policy and gender phenomenon. >> give us the beyond pmi. there were distortions for the first month and february was better than expected. all in all where are we? >> i'd say just at face value. if you look at numbers which came out today, they look encouraging. if you look at the guts of it looks as though you have growth without inflationary pressures. at the margin that's an encouraging data point. overall we're in a period where the data is particularly cloudy. if you are looking at
indicators, it is tough to see what the read is on the cyclical situation and the economy. investors are i think uncertain and willing to look ahead. >> there is a really pig point that's underlying what you are saying there that i hear again and again. markets around the world have rallied on the expectation that we will get growth, and growth has to show up now. springtime in the west. now if you look at europe, there is no growth. it's still recession. we can talk about the data here an we do continuously. whether that will go soft as it did into spring last year. what is happening in asia and do you think floebl global equitie now challenged? >> this underscores the theme in our second quarter outlook. the title of our report is from growth delivery to growth recovery. this is the issue investors are wrestling with. they're more willing to focus on growth that's here and now, less willing to bet on the growth
that's coming through. we think growth will turn up in the second half but as i'm sure you are well aware, second quarter numbers are going to be softer because of the impacts of the sequester an other fiscal consolidations taking place. growth will slow in europe -- we think we're in a more consolidated zone right here. we said in our piece for asia specifically, we think the start to the second quarter will be a bit softer. we think going through the second quarter we get through the data that's absorbed, we get irs of first quarter earnings and higher frequency indicators of how things are going in the second quarter. to the end of the second quarter markets will look to the second half and looking for the upswing. but i think you are right the data will be challenging on a c conterm rainess places. >> in terms of other asian em markets you may look, i spoke
with somebody yesterday who was pre t pretty high on the asian markets. >> philippines, thailand, indonesia, singapore and malaysia, they've generally done very well. they're clearly in bull markets right now. reasons they've been delivering growth in the here and now. economies are growing 6%-plus. earnings have been delivered. it is less hope and cyclical upturn than what's being delivered now. if you look at year to date performance, philippines, thailand, indonesia, all up close to 10%. bit of a correction recently because they ran up very swiftly but overall fundamentals are presentpy strong. the reason we have a constructive view on thailand is earnings growth this year will be 20%. that's the highest in the region with the exception of a hope for cyclical recovery in taiwan which we're skeptical of. we think consensus is overestimating that recovery. thailand even though it is run
up well it is trading 13 times earnings, 20% growth, very good infrastructure investment story that's kicking into gear. it's new internally aga lly gen growth not relying so much on outside stimulus or a western backdrop. >> timothy moe, thank you. cyprus doesn't sort itself out over the weekend they are going to stop funding the banks. we'll get the considered opinion of carmen reinhart from harvard kennedy schools. prove fessor of economics on cys pmpls a pmp . and the ceo of buff row wild wings will tell you why this is one of the busiest times of the year. march madness.
try running four.ning a restaurant is hard, fortunately we've got ink. it gives us 5x the rewards on our internet, phone charges and cable, plus at office supply stores. rewards we put right back into our business. this is the only thing we've ever wanted to do and ink helps us do it. make your mark with ink from chase.
[ engine revving ] ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken. ♪ to help you not just stay alive... but feel alive. the c-class is no exception. it's a mercedes-benz, through and through. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services.
♪ ♪ today's the day college basketball fans around the country have been waiting for. march madness is back. it means big business for companies like buffalo wild wings. last year the company sold nearly 70 million wings during the ncaa tournament. here first on cnbc, sally smith, president and ceo of buffalo wild wings. welcome back to cnbc. nice to have you on. >> thank you. good morning. >> this is the biggest time for you. right? beyond the super bowl, i guess in aggregate if you take the length of the tournament and number of games played, the amount of people watching, this is it. >> yes. march madness by far is the biggest time in our restaurant. super bowl certainly is the biggest day but this weekend the restaurants will be pack with competitive fans cheering on their teams. we love march madness. >> i'm sure you do. how much do your sales track television ratings?
>> i think it has more to do with how competitive the games are and how close they stay and certainly overtime always helps. but i'm expecting a great series -- or great tournament this year given the teams and some of the match-ups this year. >> i guess the point i'm trying to make is, a bunch of send rel las in the final four can't be that great for business. right? you want as many people watching the most hotly contested and anticipated games that you can get to drive business. right? >> we absolutely do. as important as the teams certainly. and because sometimes cinderella teams, it is kind of fun to see what's going to happen. but a close game is really as important as who's playing, for us. >> how about let's dive deeper down i guess into the actual business. poultry prices are certainly a story we follow every day. what can you tell us about where they're heading right now? >> well, we've seen them moderate a little bit since their peak during super bowl.
they're coming into our stores in march slightly down and from what weened, we're expecting them to stay at about this level probably through the summer. we're seeing a little bit of relief there. >> sally, can you talk to us about competition? it does seem like more competitors are entering the wing space. mcdonald's is believed to be rolling out the wing experiment in more locations for longer periods of time. how will that impact your business if at all and will that cause wing prices to go pryer because there is another big consumer of wings out there? >> sure. the good news is i think that mcdonald's entering the business shows the popularity of wings. certainly. they do a lot of research and they know what sells. we have great relationships with our suppliers and certainly as we have heard about mcdonald getting into the business, made sure that we have enough wings for our restaurants. we serve a fresh wing and so
it's daily. i know what's going to happen at mcdonald's. they've been freezing wings for some time and hopefully those are all frozen and won't affect the price significantly going forward. but it's really working with our pliers to make sure that we have our fresh wings that our guests can get those wings whenever they come into buffalo wild wings. >> are you maybe being the ultimate pitch. are you saying mcdonald's freezes their wings and we sell fresh wings. is that a proposition you are offering to the market? we've got fresh wings, we've got frozen ones? >> i think when i think about the competition, certainly the occasion that for someone coming into a buffalo wild wings is a little bit different than the person going through mcdonald's. i think fresh wings are great and i can understand why given the supply mcdonald's would need to have a frozen wing. but really the occasion is coming in with sports, getting together with family and friends
to have a great wings, watch the game and enjoy a cold beverage. i think it is a little bit different from a competitive standpoint. i was just focusing on the popularity of wings. >> well sally, enjoy march madness. i'm sure it is going to be good for business. did you fill out a bracket? >> as soon as this interview is over, that's what i'm doing. >> too late now! they already have some of the playoff games. >> all i want is a great game. >> sally smith, president and ceo of buffalo wild wings. thank you. still ahead on the program -- oracle's uggfully report. the company says its new sales force is to plame. obviously not larry ellison. we go inside the company's quarter next on cnbc. and rick santelli whether bernanke may taper off that bond buying a little sooner than expected and how the market should react to that. back in two.
combining your customized charts with leading-edge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. we like this idea so much that we've applied for a patent. i'm colin beck of fidelity investments. our integrated technical analysis is one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account.
morning. oracle shares are down heavily. profits fell short of wall street expectations last night. matthew is an analyst that has a performance rating on the stock. welcome, matthew. you believe this is company specific. >> yeah, thanks for having me on, guys. the company was quick to point out it was not macro and more sales forced execution was with the primary issue. >> so why do you think the stock will rise from here and to what level? >> well, it's a big move. the last one that happened was back in december 2011. we think the bar has been set appropriately low. they talk about guidance into the unseasonably strong quarter. and the stock is in line.
we could go back to a five year average of closer to 13 times. >> which is what? $37? >> $37. that's correct. >> and more broadly, is there a readthrough to other technology today? because other technology stocks are down. there's a suggestion that we have a broader problem. >> the natural reaction is to overreact overall. our best guess is this is aorace specific. other names are certainly looking to acquire shares on weakness today. >> nice to see you, matthew. matthew hedberg there. a bad day for oracle. now let's get to cme group. rick santelli has "the santelli exchange." hi, rick. >> you know, today is a very important day. i'll tell you how important it is. look at a 20 year chart of
japanese government bonds, the jbbs, tenure. we're under 60 basis points. now actually it has been a smidge lower. in '03 it traded a a lower basis. and the new governor of the bank of japan, today is his first official day, he is going to try to fight the deflation nar monsters. whether he succeeds or not, this is the area of the bazooka. the kind that supposedly affects monetary policy. i think it was first used by mr. paulson. then i think that special financial weapon so to speak was
given to mario draji. and in july he said i have this bazooka and i'm going to fire it if i have to. so far he really hasn't had to fight it. maybe it only aims in certain directions. no matter how this turns out, this is a very key moment. what are the unintended consequences? i can't tell you. this thing has been on loan moving around to various governors around the country. and we have our chance today to fire the bazooka. yes, here's the bazooka. here's my problem. i hope it doesn't turn out to be a bubble machine. so it's something to watch over time. in the end it's been said a thousand times, you can't print your way to prosperity. back to you. >> thanks for that. let's get to john harwood with breaking news. a new normal and fiscal
policy in washington. two votes back-to-back. one, approving the ryan budget, which is a polarizing document, as the democrats are polarizing. they also passed the continuing resolution to keep the government funded past march 27th. that was one where they cooperated in a bipartisan way. you had a majority of republicans voting for the bill. democrats also voting for the bill. washington has decided no more crisis. we're not going to shut down the government. you can expect more when the debt limit reaches its conclusion later in the year. they're not going to have a crisis over that, but you'll have a long-term discussion about taxes and what to do in the long term. but in the short term, they're trying to keep it as smooth as
possible. that'sen extension of the government funding through the rest of the year. >> cypress must find billions of euros to avert a financial melt jen down. can it be done? we'll speak to professor of economic for her take in just a few. thank you orville and wilbur... ...amelia... neil and buzz: for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond.
80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it. a talking car. but i'll tell you what impresses me. a talking train. this ge locomotive can tell you exactly where it is, what it's carrying, while using less fuel. delivering whatever the world needs, when it needs it. ♪ after all, what's the point of talking if you don't have something important to say? ♪
because what you don'tu know can hurt you.rance. if you don't have something important to say? what if you didn't know that weeping willows have invasive roots? what if you didn't know that a trampoline... could affect your liability? and what if you didn't know that most cars... get broken into when the weather warms up? here, buddy. the more you know, the better you can plan for what's ahead. get smarter about your insurance. ♪ we are farmers bum - pa -dum, bum - bum - bum - bum ♪
again, it's been again, it's been fun having squawk here. what's coming up at the half? >> we have the analyst who upgraded the yahoo!. david rose dprks nberg, mr. bear. we'll see if hooe wear his bear suit. and mike ryan is the chief investment strategist for ubs. we'll have him. maybe we'll pit the two guys against each other. >> did you say it was a costume party? >> it will be a surprise to see if i'm wearing one. you'll have to wait and see. >> have a great day. have a great day. i don't know which camera we are. but welcome. this is what you've missed so far today. welcome to hour three of "squawk on the street." here's what's happening so far. >> we've had a recovery in terms
of housing prices because we have tight supply and then you look at the bank numbers and lending is flatly down. >> quite likely that cyprus will leave the euro zone. that's a really important event. >> most americans don't know. they certainly can't find cyprus. it's been forever since they took geography. they do know to buy a home before the rates go up. >> there's no grand jury. there are no indictments. there are no convictions. that's the way this market works. >> i may have a bench trial on this later. >> i'm going to get a permanent injunction against the sellers. >> i think stocks are undervoled today. we can talk about payroll jobs all we want. but corporate profits right now are at an all time record high.
>> the occasion is coming in with sports, getting together with family and friends to have great wins, watch the game, and enjoy a cold beverage. >> good thursday morning. good morning. we're live at the new york stock exchange. let's take a look at the markets which are in negative territory today. we have a problem with technology. cisco, ibm, hp all lower despite hp raising its dividend in the last 24 hours. today cisco is one of the biggest decliners. underperforming. if analysts saying cisco will become increasingly more challenging as it transitions to a more software and service centric business model. >> let's get to the road map for the next hour of "squawk on the street." markets backing off from the
record highs as digesters get a mixed bag of economic data. find out what it all means for your money. plus lululemon says the problem is not over yet. most customers say they will be loyal. then we get a take on europe. will cyprus leave the euro? find out what she says. probably not. >> so markets on the red here on the back of mixed economic data here. we're joined now by jeff, chief market strategist at lpl financial. maury harris also joins us. jeff, let me kick off with you, where do you think the markets will go with here.
it's been a sweet six weeks of the stock market. a record unbroken since 1989. not surprising to see something even like cyprus cause a pause or a pullback here in this market. but it's one to buy into, not to fear. we probably haven't seen the highs yet. >> why buy? ? why have we not seen the highs? >> i'm sorry, yes. business spending is really coming back in a significant way. clear lly oracle's data suggest hiccups along the way. look as a real driver to the upside. home builders as well. that's a theme that's going to play up over the course of the year. a lot of positives still yet to be seen in the market. >> the key is what the fed will do. what it won't do. i'm wondering based on yesterday's conference, is there
anything that you expect the fed to do when it comes to quantitative easing and when the fed will taper off? >> well, you're very right. this has been very important for the economy, very important for the markets and the message we got from bernanke is they are going to err on the side of caution with the economy and continue doing very large amounts. i think that probably tapers off toward year end, but that's not necessarily bad for markets because it tapers off in the context of maybe better than expected economic growth. >> we were calmed by the data this time last year. the data in january and february came out strong. employment data was strong and there was significant give back as we went to the spring. are you sure the data is solid this time snarnd. >> i think it's more solid than last year.
you had a milder than normal winter. and you had the payback moving into the spring. this is more fundamentally based. we had another year of qe under our belt. >> maury, haven't we also had this year a milder than normal winter? >> not necessarily. not if you want to compare this winter to last winter. likely, of course, we've had pretty big storms here. how do you play it? what should you avoid? >> we've been selling -- so we sold transport. retail is maybe an area you want to be cautious about here. we have the sequester kicking in. could cause 750,000 jobs.
gasoline prices are high. they're feeling the tax hike. so there's areas you want to be trimming. industrials, home builders, those areas will see a nins bounce back. in the near term we do get a spring slide, just like we've seen each of the last three years. a lot of things coming out of europe. we've seen earnings disappoint. only 1% earnings growth. it may come in weaker than that. >> why would you continue to be a buyer? if you do believe the sequester will impact the economy, that could potentially put a freeze, even if temporarily, on the housing market? >> i may only slow the backlog. take a look at this in terms of inventory. those weak points that we may get in the home sales data is
because there's not enough inventory on the markets. home builders simply can't get them made fast enough to supply the demand. so there could be a couple of hiccups along the way. no doubt there will be. this is one to buy. >> you both made your case well. thank you very much. have a great day. >> now to europe. it will be monday before they reach a deal on the bailout in the inevitable collapse. michelle is live in cyprus with the very latest on the story. michelle? >> we'll come back to michelle in a moment. >> in the meantime, we're going to take a quick break here. we ask you what yoga pants? find out if the company's problem with sheerness is a temporary hiccup. ♪
hi. i'm here in cyprus where the financial crisis -- i'm live in cyprus. welcome back to cnbc. take a look over my shoulder. what you see is a line at an atm. right now it's ten deep. it's been running 20 deep all day long at all the branches of this bank. it's one of the weakest in cyprus. it's one of the ones under
threat as this country grapples with the financial crisis and secures a bailout from the european partners. this is rapidly becoming a cashless society because all the banks have been closed for a week as they wait to figure out what they're going to do. we've been speaking with business owner who is tell us because of the situation they haven't been able to get credit from suppliers overseas. we spoke with one individual who operates an import business of specialized fruit. he says he has taken measures to deal with the fact that there's not much cash in society. his suppliers are asking finish cash, which means it's more difficult for him to get business. he knows they so desperately needed it. take a listen. >> we are doing our best to expedite the cash collecting process in order to pay our employees next week. most of the shipping lines
require that we pay in cash. so if we want to get some important goods out, you have to pay in cash. >> so once again a line here that we've seen all day long. there's supposed to be a meeting in just a couple of hours at the parliament where they meet again to discuss how they're going to come up with 5.8 billion euros in order to comply with the european union. the ecb is really putting the pressure on the country to come up with something. >> it could get really tough there. closer to home after we got the warning earlier in the week from lulu lemon. they expect the recall of the pants deemed too transparent to sell will reduce first quarter
earnings by 11 cents to 12 cents a share. the stocks trieding slightly higher in a market that is down. jackie is back with more details on a fascinating story. >> good morning, simon. the good news is this quarter is not koekted by issue that made the pants see-through. they were above the estimates on top and bottom line. and same store sales rose 10%. but also you said, it's the outlook that disappointed because of the recall. first quarter revenue guidance is in the range of 333 to 343 million dollars. the company getting 28 to 30 cents and the street was looking for 40 cents. on the conference call, analysts were for the most part really
focused exclusively on this yoga pant issue. they wanted to know how the see-through pants made it to stores. what the company is doing to fix their quality control process and how customer service is being handled for the recall. when asked specifically if anyone had tried the pants on during the qc process, christine day, the company's ceo said this. >> the only way that you can test for the sissue is to put te pants on and bend over. just putting the pants on themselves doesn't solve the problem. >> put the pants on and bend over. we talked to lulu lemon customers to see how they feel about the situation. here's their take. >> i think it's nice they're allowing you to return them if your pants are see-through. they recognize the mistake that they made and they're willing to make up for it. >> i think it's funny.
people wear all different things to go work out. a lot of things are more revealing. i think the whole thing is funny. >> i'm a fan of the store. i think they have great products. i'm going to say they came to the right decision for themselves. >> i think they're being honest and that's the best thing. >> it appears customers are remaining loyal to the brand and they're also looking forward to the company correcting the problem. i'm definitely going to take more care before i do the next downward dog. >> next time i try on a pair of yoga pants in the dressing room, i'm going to bend over. that will be the cry for buyers in department stores. try on the pants and bend over. >> thank you very much. liz dunn has a neutral rating. good to have you with us. >> thanks for having me. >> we make fun of the notion of putting the pants on and bending
over, but this is a key point. it's like testing a car by turning it on but not driving it. or testing food by looking at it instead of tasting it. it seems putting yoga pants to work is a very important aspect of the quality control process. are you satisfied that they have a handle on the situation? >> well, i don't think they necessarily do have a handle on the situation in some regards. they don't know why it happened. they don't know whether it was input into the product or the manufacturing process and they can't really say when they'll have product back in stores that meets their specification. i do think they've made several important fixes going guard. they have several people that they've added on the ground in asia ya. they're all trying it on and bending over. i don't know. >> well, let's hope after that. but, we have had the conference call already.
are you satisfied that they are actually looking at that supply chain? because they didn't want to say it was this one particular supplier. they seem to be careful about staying away from that. but do you think they have actually identified the problem? they have no idea where this is coming from? >> i think it's too preliminary? i don't think they know quite yet. they would have been forthcoming had they known and specifically the question was asked and they didn't answer it. they said it's just too early. they're looking at all aspects of the manufacturing process and i feel confident they will identify the problem. >> our reporter talked to a lot of people on the street, just typical consumer of lulu lemon products. they feel very forgiving. they like the company's response. how far will this issue go with the bleeding dye with the tops? with the transparency problems, with the swimwear. could this be the likes to take some market share from lulu? >> well, one of lulu's benefits
is they have a very engaged customer base. and so some of the bloggers are really up in arms about this. i think lulu has a really strong fan based. they're very engaged. they expect a lot and do very well. they stand out very well to others both from a functional stance. and so i think they will be forgiving. but the company needs to get in order. >> they've outlined the impact on the first quarter. at what point do you get concerned about the forecast for lulu? at what point do you say they don't have these back in the market so therefore i have to take the rest of the estimates down? >> well, they actually took second quarter sales down more than first quarter sales. so they're expecting a bigger impact for second quarter sales. gross margin was a bigger hit
for the first quarter. i think they've adequately reflected it. they're talking about new sources of manufacturing. they want to get the product in as soon as they get product to use christine day's phrase, they can stand behind. so i think they've been conservative on how they modeled this. >> good to speak to you. thank you for your time. >> you know t data today is quite good. but the tech sector is really getting dragged down as a result of oracle, cisco and ibm in negative territory. there you can see the figures written well on the wall. the dow now down 56. the s&p down 67. let's go to josh lip on the for more on yahoo! doing well in tech. >> yes, simon. check out yahoo! in the green this morning. analysts like what they see
here. they upgraded the stock to outperform and raised the price target. the biggest tune will compete in 12 months, benefitting yahoo! as it has a stake in the company. yahoo now up some 15% this year. >> thank you very much, and staying with stock, it was just seven years ago that there was no twitter. we'll take an in-depth look at how the site has changed the world with one of twitter's earlier uses. and kacarmen reinhart will be here.
arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz. oracle shares down sharply, down by 9% after reporting sales and profits that fell short of
wall street estimates. mark has a market per pering rating on the stock. he joins us now. great to have you with us. what is the diagnosis of the problem? is this an oracle specific problem or an i.t. spend problem? >> our belief is -- thank you for having me, by the way -- our belief is this is an oracle issue. the combination of execution with a potential of it relating to product mix. >> let's go through the product lines and i want to start with hardware. hardware is down 23% flat versus the previous quarter. certainly worse than guidance. but recently the company talked about making a turn some time later in the fiscal year. how far off is that goal in the view? >> the company has changed that to be that they will turn the quarter later. so it's not the end of the fis
kwal ye fiscal year, but the third quarter. this is a reasonable setback line. a lot of miss was new hardware product sales. >> and the new product would be the new server on the market? >> it was a combination of thing. they say the component that oracle designed that enhanced the traditional software products, that that sold fine. demand was up. they introduced a lower and lower cost entry point device that brought the asp down, which may have had a little bit of an effect here on it. the biggest problem is there were new product cycles and clients recognize them on the traditional sun pruks, and therefore sales fell off cliff on those divisions and the m series doesn't come out until
this quarter. if it was simply the m series and that was because we should see a pickup after launch of the m series. there's still issues in the ability to be able to understand what is happening in the rev new stream. >> in terms of missing the guidance for the various product lines, i'm wondering for you think competitors have been able to gain traction off of that, if there are those who benefitted from oracle's losses and missteps. >> the bigger issue is obviously within the software space. the other big miss was in new products and cloud. the cloud according to management did just fine. the miss was in new product sales. that's two parts. the application base where we have recently seen problems as they had some losses to the cloud. vendors with other vendors in the space and in their data base business. there we worry about the
long-term effects from the cloud and ultimately data babases. >> mark, great to have you with us. >> so the markets down just 52. >> hey, simon. here's news that reuters is reporting. making it more likely that the software maker will be taken private. the deal would top 6 billion and they have formed a consortium. bing capital and golden gate capital have separately teamed up. you can see the software up 4% right now. >> thank you very much. harvard professor and international finance expert carmen reinhart will weigh in on cyprus, what it means for global economy and the american stock market. she joins us right here thursday morning on cnbc. re.
with the fidelity guided portfolio summary, you choose which accounts to track and use fidelity's analytics to spot trends, gain insights, and figure out what you want to do next. all in one place. i'm meredith stoddard and i helped create the fidelity guided portfolio summary. it's one more innovative reason serious investors are choosing fidelity. now get 200 free trades when you open an account. otherworldly things. but there are some things i've never seen before. this ge jet engine can understand 5,000 data samples per second. which is good for business. because planes use less fuel, spend less time on the ground and more time in the air. suddenly, faraway places don't seem so...far away. ♪ ...amelia... neil and buzz:
for teaching us that you can't create the future... by clinging to the past. and with that: you're history. instead of looking behind... delta is looking beyond. 80 thousand of us investing billions... in everything from the best experiences below... to the finest comforts above. we're not simply saluting history... we're making it.
markets markets are in the red today. let's dig down further. >> with all the earnings commentary and di appointment, is the markets starting to show signs of aging a little bit? and the answer is no. not yet. and i know it's a mess. i'm not happy with fedexor air gas ear. we're looking at historic highs
that we've been hitting. we're close enough on the s&p. let's not argue about it. 1.6 on the s&p. 0.8 on the mid cap. that's not raising eyebrow territory at this point. so far the market is holding up quite well. i'm still not happy with the earnings. air gas is a great indicator. gas is to make things, manufacture things. they're the big guy in this space right now. they said their volumes in february was disappointing. their competitors, also to the downside. let's move on and show you other things. home building stocks were weak because we didn't track a barrier on existing home sales. they were trying to get 5 million. it doesn't mean anything. just a round number. the home builders just kind of
rolled over. kb home was okay. 40% increase in new orders. that's good. but remember, last year kb homes was a disaster. last year at this time they were minus 8%. so it looks good, but in compare ston to everybody else, it should have been in the 50%, almost 60% rapg. it didn't make that, but it's still a good report. some of the other home builders have rolled over. and speaking of real estate because we had a great one here. this is nursing homes primarily. this is pricing well above where it was pricing earlier in the day today. you see at 22.82. over at the nasdaq we have another ipo with pharmaceuticals that's also doing very well. priced at 14. finally, just on cypress, and we don't know what's going to happen.
the russians or anybody else will come in and save them. there's a general consensus that this may be a water shed moment for them. they are going to shoulder a larger share of the debt reburdening structure overall. it will take the form of some kind of tax. i don't care if you call it private sectors. this is a water shed motor. i think the citizens will share the burdens right now. a lot more. >> they're offering to bail out the banks. have the cypriots able to deal with that? >> it's a huge issue. >> yeah. >> thanks, bob. >> let's get a check on energy commodity sales. >> let's look at the natural gas market. we saw natural gas prices come up pretty sharply after the supply data came out.
now gas is recovering. it's nearly a self fulfilling prophesy that we'll see natural gas likely close above the $4 mark today. we're continuing to watch what is happening to the oil price. and with the weakness in the euro we have seen oil prices come up as well. there is concern about what is happening in cyprus. what will that mean for european energy demand? so we're we're all looking at oil prices off a bit on the the data. keep in mind as well when you look at china's flash pmi data and some of the manufacturing data that we've seen out of china, that, you would think, would be positive, but it's not. why? there's just so much supply out there. traders keep telling me about the level of supply at the warehouses all around the world and the level that it is right now is so high. they say even little uptick in demand is just not enough to eat away at the supplies that we're seeing. so we are looking at weakness in
the copper market. back to you. >> one reason the equity market is down is because they told cyprus if it doesn't do a deal, they will cut off the emergency funding. rick santelli has more in chicago. >> thanks, simon. my guest is mark. i always like reading your pieces. and you called what's going on in cyprus the second unique and special case. of course. the first being greece. you were one of the first to predict the bankruptcy, not armageddon. it's like snowflakes. if you find two are the same, freeze them because you'll throw the world in a tizzy. is this the same principle? if cyprus leaves the euro zone, does that mean even with that little country things start to unravel? >> if you look at cyprus and greece, they're two small countries. the mistake the investment
market made is saying they're small countries and they don't matter because they do matter. the second issue that you just raised rick is cyprus, if they leave the euro zone, regardless of the size of the country, regardless of what their banking institutions are, that means the first country that has left the euro zone, and that will be quite problematic and may cause more problems than people think. i think the situation is more serious than people think. >> mark, i'm going to put you right in the middle of the controversy. yes or no answer. you have a good track record. do you think cyprus will leave the euro zone? >> i think there's better than a 50/50 chance they're going to leave. i think one of the main problems, rick, is europe mandated that people's bank accounts get depleted by 10%.
if any american citizen walked into a bank and the government took 10% of their money to help pay down the national debt how they would feel. >> i completely agree. with regard to other issues, there's been a raft of headlines out of russia. some say take them with a grain of salt. but it certainly seems like russia and germany are locked in this dual, a game of chicken. what is in the best interest? >> well, germany is trying to have oppression faith. they're trying to put on a very strong showing to appease the people. first they called it attacks, taking money out of their bank account. that was not the truth. then what the germans because they're running this have done
is they're putting all this pressure on cyprus. not every bank in europe is cyprus. there's the french banks in cyprus. these banks are not all bankrupt, and it's just not the truth. >> mark, listen, we're out of time. we've been out of time. real quickly, where is the next 5% on the euro versus the dollar? up side or downside? >> downside. >> thank you, mark. simon, back to you. sorry we went long. had to ask you. >> certainly finance officials are acknowledging they are in a mess and have discussed imposing capital controls to impose them from a collapse of the cypriot economy. the dutch prime minister is now the new head of the euro group of 17 finance ministers. >> will you do whatever it takes to keep cyprus in the euro zone?
>> yes. >> even if that means extending the program? >> no. that doesn't help. they will leave behind a debt position which is simply unsustainable. we must allow for a program from cyprus that allows for them to find a new growth path. >> so a russian solution is the only option if you won't increase the size? we'll see what can be done with that loan, but i'm afraid that let's just see what the russian option may deliver. i haven't heard much good news from that side. >> harvard university's carmen reinhart has worked to fworm the understanding of financial crises for over a decade. she coauthored a book titled "this time it's different."
welcome. >> thank you. >> what is your analysis? >> well, first of all, on the debacle i think we're not going to see banks open with with regular withdrawls. i think when the banks do open and it may be the last time a dollarized economy had a bank holiday. that would have been panama. it lasts two months and when they did open a lot of the accounts were frozen or converted to long term. so do not expect a normal opening of banks. let me give you two numbers to put perspective on that. cyprus external debt is five times gdp. half of that is short-term deposits. >> the true taste of the banks are insolvent. if the ecb carrying out the threat not to keep some money in there, then on tuesday when they
have a public holiday, they are insolvent. yes, people are being asked to take a haircut on their accounts. but if the situation is not resolved, they won't get any of their money back, and their pensions won't be honored either. >> look, on cyprus it is not if they default, it is how they will default. is it a haircut on government debt a la greece? not really. it's actually the big issue there. you can't resolve the cyprus issue without dealing with external foreign deposits. that gets to russia. okay. i personally, you know, would not be betting on the russians coming forth and providing a big rescue package. >> me either. >> i think we'll see a drawing out. don't bet on them opening on tuesday.
the progress of this dragging on as bank -- bank deposits are going to be converted one way or another. >> sorry. what does that mean? >> it means today you may have a seven deposit. tomorrow may you may have a 20-year -- >> i think the alternative to an outright haircut is some form of freeze in which you can only take out limited amounts at a time. another possibility, of course, is a conversion. you know, argentina which has tried most things under the sun in this regard in their fame plan, you know, overnight deposits became long term. there are so many market participants that seem to want to discount the situation. we had a guest on who compared it to green bay, wisconsin. >> do not take size as an indicator of importance. let us remember, thailand is not a being systemic country.
when russia had its own crisis in '98 which reverberated through the entire global financial system. >> is this comparable to the crises that spread in your view? >> well, in my view what is going to happen is a kind of con today january that is what different. it's definitely different from the russian buyers or from the tai situation. it's going to be predominantly households, firms and everyone in europe looninging at their banks and thinking twice about keeping money there. my expectation is we will see more capital controls. we won't call them capital controls. we will call them different things. but in effect, a suspension of
what tobin has called sand in the wheels to slow down a hemorrhaging is what's ahead of us. >> it's going to be a busy weekend for that. that's for sure. seven years ago the founder of twitter sent his first tweet. the rest is history. we'll look at how twitter has changed the world. first, what do grain prices and ronald reagan has that. >> we're going back further than that. these are oats that can sometimes be used for expensive corn. the national weather service, we're going to have drought like conditions this spring. that plus iraq, iran, after the break. zap technology.
but, i wish it was more dangerous, like a monster truck or dune buggy! you can't have the same car as me! [ male announcer ] now everyone's going to want one. let's get a jetta. [ male announcer ] volkswagen springtoberfest is here and there's no better time to get a jetta. that's the power of german engineering. right now lease one of four volkswagen models for under $200 a month. visit vwdealer.com today. the amount of land being set aside to grow wheat, corn and soy is this year expected to be the largest since the early years of the reagan administration. that's making some people optimistic that we can return to more normal food prices in due course. let's get to jane wells who's in a field. >> reporter: that's right, simon. now a year ago america was expecting a record corn crop. then came the drought.
this year we are expecting a record corn crop. we'll see. the weather service says it's going to be warm and dry over the next few months. wells fargo expects corn to go to 6 bucks. kurt already planted corn in texas and it's starting to emerge. up in nebraska, some are not planting until next month. he had such a horrible year in 2012 due to the drought that he's doubling down on crop insurance. >> we had some snow and some rain to make up a little bit, but i would say we're still 12 inches below normal in this area of northeast nebraska. and so i'm a bit nervous. >> reporter: well, kurt mowery is not nervous. not only did he have a great year, but he benefitted from record corn prices due to the drought elsewhere. but mawery also grows rice globally the competition has become ruthless. american farmers are glad they can finally start selling rice to iran, but they're unhappy with what's happening in iraq.
>> they used to be our number one market was iran and iraq and because of the instability in that region we've lost those two markets which we would love to get back in. particularly iraq. it didn't make a lot of sense for us to do all the fighting over there and losing american lives and now they won't buy rice from us. >> reporter: well, rice from thailand and india is cheaper. the usda says rice prices are on the rise but so far this season, iraq has not bought a single grain. back to you. >> who knew it was so complicated. jane wells, thank you. >> one small tweet for man and one good night twitter verse for mankind. seven years ago the very first tweet was sent by the site's founder jack dorsey. up next we'll talk to one of twitter's earliest users about how the site has changed the world. much more "squawk on the street" on the other side of this break. stay tuned.
welcome welcome back to "squawk on the street." i'm josh lipton. bp is moving higher this morning. the news here rosneft saying it's closed the acquisition of the world's largest crude producer with bp as a major shareholder. bp's ceo calling this an historic day for bp in russia. the deal reported as a victory for rosneft's chief. putin says it's a positive because it monetizes some of the
russian exposure but the bad news is it's not a terribly run company and the political risk in russia is significant. back to you, guys. >> thanks very much. today we're wishing a very happy birthday of sorts to twitter. as the social media good night celebrates seven years since its very first tweet. the tweet that kicked it all out, just setting up my twitter from the co-founder jack dorsey on this special occasion. a look at how the company has grown. drew olinoff is a junior writer. one of the early users of twitter. did you ever think we'd get here and talk about twitter as the next hottest ipo/takeout target? >> sounds ridiculous, but, yes, absolutely. i think this service stuck for a lot of people very quickly, and it made a lot of sense. it took some time to grip with mean stream consumers but the geeks got it very early on. >> what was your first tweet? i'm just curious. >> i think it was something along the lines that this is
really stupid which is probably the same tweet that most people put out there because it took a while to get into a groove of why it made sense, but i think as you see, when you follow people and see their stream of consciousness it does -- it makes absolute sense. >> why do you think twitter has been able to occupy this unique space in social media and actually own it because there have been so many instances of various other networks in the past that became all the rage and then quickly died out. i mean, remember myspace. there's so many other examples littering the social media history books. >> yeah. i think the reason why twitter gripped so quickly is for two reasons. it's simplicity and the fact that it's built around the notion of realtime. i mean, jack dorsey, one of its co-founders tells a story all the time when he knew that twitter was important is when there was an earthquake and maybe six of the tenuousers on twitter at the time all said and tweeted at the same time is that an earthquake, and that was the -- that was a signal to him that there was something
special. >> you know, drew, i don't know if you watch the "60 minutes" program, but what was really interesting is how essentially the idea was borne out of listening to emergency calls on the radio where responders would say i'm here. this is what i'm doing, very short bursts, and then would you get to the length of the twitter message. you know, there are hundreds of thousands of technicians at hp and ibm and nokia who look at the next big thing and billions of dollars are spent and one guy who of his own volition that's not a very good communicator who just perceives the world in a different way and then changes it. >> right. yeah. i think the interesting thing about jack evan and what they saw is twitter was just a platform, that the important things that were going to happen were going to come from the people that use the service, so they tried to build twitter around the people who would be joining it. i mean, i think you've seen amazing things come from our president barack obama. you know, the first place he went to when he was re-elected was twitter, you know, posting a picture of himself and his wife. i think that's -- that's
amazing, that's huge. >> right. drew, we're going to leave it there. thanks for joining us. >> thanks for having me. >> and we'll be right back. this is cn cnbhursday morning. stay with us. ♪ [ construction sounds ] ♪ [ watch ticking ] [ engine revs ] come in. ♪ got the coffee. that was fast. we're outta here. ♪ [ engine revs ] ♪ [ engine revs ] (announcer) at scottrade, our cexactly how they want.t with scottrade's online banking, i get one view of my bank and brokerage accounts with one login... to easily move my money when i need to.