Transcripts For CNBC Squawk On The Street 20130109

Squawk on the street begins right now. Good wednesday morning. Welcome to squawk on the street. The shows going well already. Im carl, with melissa lee, jim cramer and david faber. We have earnings season officially under way. Courtesy of alcoa, some pretty decent sentiment this morning. Well talk about that with cramer in a moment. Europe, numbers over there as well. Germany Industrial Production did miss. Green arrows across the board from london to paris to frankfurt. Our road map kicks off with earnings season. Europe is better than expected, but does this set the tone for the season with goldman predicting the s p will be in a Holding Pattern for the first quarter. Apple at the low end. The journal reporting a cheaper iphone may be in the works. Is apple simply going to where the growth is, and a sign that margins may face more pressure . Yet another setback for boeing and the 787. Canceling a domestic flight after a computer erroneously signaled a brake problem. Clearwire gets a bid. Dish network offers 3. 30 a share above sprints offers. David faber has the details on this story. Sending sprint lower in premarket trade. Results from alcoa last night, rising in the premarket after reporting fourthquarter profits in line with estimates. Revenues above forecasts. Alcoa says it sees aluminum demand growth ul 7 this year. The previous forecast, jim, 6 to 6. 50. Not bad if youre looking for something global out of 2013. What europe taketh away china giveth. The ceo has really spent a huge amount in china. Whether it be for autos, aerospace, whether it be for trucks, are so bullish, that they can offset whatevers happening around the world globally. Remember, theres two components to alcoa. Theres also the raw stuff which he said inventory is getting in balance. Thats very important. And youve got the packaging, industrial, construction, you have trucks and turbines. Ill tell you, this was a very bullish call. The one thing i do want to point out, Klaus Kleinfeld was unhappy about the fact that moodys put this company on review. Theres a lot of talk about Free Cash Flow and net debt going down. This was the most humorless i have ever heard Klaus Kleinfeld. Hes got the i always think of the bonneville. Kleinfeld. Hes from east germany. He is usually much more wry. He was very pointed. He said, listen, ratings agencies, have you looked at what weve done . I like his attitude. It wasnt a downgrade. On review for a negative watch. Aluminum prices were in fact low. Unfortunately for the quarter, Aluminum Prices actually rose. We saw in london the price per ton of aluminum was up. Does that stave off moodys . And their move on the i think moodys has got their head spinning. That could be another catalyst for the stock which has basically been rangebound for years now. Directly, they addressed moodys only in the q a. What theyre talking about is the dramatic cash flow. Energy costs down in the united states, that matters. The saudi plan is finally kicking in. And, you know, this is a cash on hand story. Theyve really developed a situation where theyve brought some labor costs down. They had a pension contribution. Always difficult. 1. 9 billion cash, they only have one piece of debt due in 2013. This is a much better story. Again i want the bigger takeaways. I care about it, but i dont care that much. I want to care more about what it says i think thats a great point. The answer is, europes not getting that much worse. You know, if you were a calculus guy, you would say the ratetorate exchange is greater. If we have a problem with the debt ceiling. China is straight up. What is klauss view on china . He thinks the new regime came in and said, you know what, weve been way too tight, way too worried about inflation. Lets put on the jets, infrastructure spend. What i think theyre developing in china, and i candidly get this from klaas, its a sewer situation. I know that sounds strange. But literally theyve got to do infrastructure underneath the cities. Theres trillions of dollars to spend. I like the call for what he says about china. It is bullish. As a theme, a year where a lot of investors ive talked to, its somewhat themeless. So theyre looking for things that they can build a portfolio. China, autos, trucks. Talking about 11 growth, back to double digit growth in china, i listened to byron. I wanted to slit my throat because hes aggressive about the s p. Now back to china. Byron on china said the reformers are actually going to make some traction this year, and shares up 20 . That is all good news. So instead of being emergency trach yo tracheotomy with a ball point pen, theres a good story in china. After the new years holiday, which is coming up hes talking about february. Exactly. In the interim, could there be a gulp in earnings. To davids point, though, we did get some other dan is a decent guy, is alcoa a tell or are you willing to go far out on that limb . I am willing to do that. Because one of the things that ive learned about kleinfeld is when things arent so good in the world, he tells it. He was the first guy to single the truck build down dramatically. Subsequently the truck orders were really bad. He was the first guy, by the way, to understand the concept of longterm growth in aluminum, trying to double. Hes saying that that growth, which he had thought you know, 6 , you mentioned the 7 . Thats bullish. As far as the inventories go, theres been a lot of financial backandforth about the hedge fund story, aluminum, the tango. Morgan stanley, he has perhaps the best grip now of global finance, too, because that decision to go i think hes smarter than the average bull. Ive never heard you so excited about alcoa. This is a great call. I love these, on the offensive. I do wish he had told a few more stories about the way east germany was when he was growing up. The number one person in this claude. Youve got to love this. Just this kind of backward, you know, being facetious. Lives of others, we always talk about that. Lets talk about apple this morning. The wall street journal reporting the tech giant is working on a lower end iphone and that a lessexpensive version could come out later this year. Apple faces pressure to make the iphone more affordable as lowcost rivals are gaining some market share here. You have to wonder about the margin issue, because you think that lower phones, the margins are going to be lower. Piper jaffray makes a point that these are phones that will appeal to a whole new base of consumers, not only the ones that are trading down, not necessarily a sacrifice, youre still sending the highend phone, but a new Customer Base in the emerging markets in china. Is this a slap at nokia perhaps . Apple could preannounce a sharply better than expected quarter, and double the dividend buyback. Is it jim cramer on twitter, someone said is this the most hated stock youve ever seen. Youve seen a lot of hated stocks. Maybe if they said, well split the stock. You know, 1 for 10. We now realize we have found a way it be able to run automobiles with water, that was the hope of steve jobs. They run on water and weve got that in q2. Im taking numbers down. Thats where we are right now, the mindset of apple is so horrible, that i feel like taking a big bag of macintoshs and smashing them. If this story had come out a year ago, it would have been seen as leading a way in the emerging market play. This is exactly what they needed to do. 40 billion more apps, china taking over the world, nokia destroyed. Now its like, a new phone, you know, wow. The context is a different context this year than a year ago. You look at the thirdquarter share loss. 14. 6 down from 23 a year ago. You look at samsungs growth, and samsung at 31 of worldwide shipments, from 8. 8 . So were seeing these two sort of cross paths here with samsung on the upswing, samsung yesterday reporting a record year, and apple on the down side. How long is tim cook going to subsidize its biggest enemy, samsung, and not go to Taiwan Semiconductors . Do something about this south korean invasion. Samsung is apple around the world. No doubt about it. Took that nice train from london to paris. It goes a lot faster than amtrak, just so you know. Does it lose money every year . No apple iphones to be found. But you saw a lot of galaxiegal you know, ive got to tell you, apple, wow, what a powerful hurt its being put on a lot of people. This was one of those stories that everybody owns, and now everybodys saying, what the heck. Right. Got to break some news here with mary thompson. I think shes back at headquarters, news on aig. As we all know, the companys board is meeting today. And evidently after this meeting, according to a source, representatives from the treasury of the new york fed, as well as Star International will be presenting to the board in whats considered a kind of mock trial. Complete with rebuttals from all sides. It focuses on Star Internationals lawsuit against the government. Star international, which, of course, is a holder of aig stock, and run by the former ceo, is suing the government for 25 billion, alleging that it didnt pay investors fairly during the 182 billion bailout of aig. Now, aig yesterday releasing a press release saying the board does have a fiduciary responsibility to look at this lawsuit. There doesnt seem to be a lot of appetite among the Board Members to pursue this lawsuit. But today theyre hearing from all sides and hopefully well have an update later in the day. Mary, thank you for that. Mary thompson over at headquarters. David . Shares of clearwire are up. Theyre up rather sharply, actually, after the Wireless Service provider received an unsolicited takeover offer, we use takeover in a broad context here. This after Sprint Nextel agreed to acquire the part of clearwire it didnt already own. That deal agreed to by the special committee of sprint of clearwire at 2. 97 a share. This one fraught with complexity, to say the least, jim. The way i view it is, if you imagine a poker table, youve got a lot of very sophisticated players around that table. Youve got sprint and soft bank, of course. First entrance into the u. S. Theyre saying were going to pay 2. 97. Theyre in a fierce war against verizon and at t in which timing is important. Youve got charlie hes the man. Youve got charlie, extraordinarily smart man, who looks at his opportunities here. But we dont really know what hes after. The fact is, he cannot actually put together a deal here to buy all of clearwire 3. 30 a share. Whats he doing . The special committee operating on behalf of the minority shareholders here is going to look for an opportunity to maybe theres a some way to get to a point he can buy 25 of the company, all of the spectrum, 25 of the company being paid minority shareholders 3. 30 a share. This is fraught with complexity. Sprint has all sorts of different rights that are in the way here. If you are in the special committee of this board of clearwire, by the way, i think theyve done a good job. Its run by dennis hersh, who i know, theyre advised by very good people, theyre finding out ways to get sprint to pay more did the special committee hes been head of the special committee. Did they bring charlie in . No, the special committee here is going to work, as it must, to try to see if theres some sort of workable deal whether they with either get sprint to pay more money, to get this done with, because timing is important, or come up with some sort of workable plan so ergen can play 3. 30 a share. Where was these guys when the stock was in a pocket . What i want to make sure people understand is this is not a typical overbid from some company where youve got one bid at 2. 97 and a Clear Pathway to 3. 30. Not at all the case. And the other question is, what ergen is really after. Where is he really going, is he going to try to work a back door deal with sprint, because dont forget, dish has bought an enormous amount of spectrum of its own. It got approval from the fcc in december to use that spectrum. But it doesnt have anything to use it with. It doesnt have an actual company. It needs to partner. And theyve been trying to work a partnership. So youve got to remember that as well. So a lot of complexity here. I guess the key question from the minority shareholders point of view, chunky Shareholder Base there, they can say no to a deal. They could turn down a deal where they would want to go to bankruptcy, where they think they could have a higher recovery value, i dont know. Or does sprint just say, fine. Possibility hes just taunting them. Yeah. But listen, hes the guy who sees an advantage and will press that advantage. He sees an opportunity and will try to take it. Well see where it goes. By the way, he also owns a lot of debt. Ergen just plays his cards. Well see what happens. Never play cards with a man named doc. Imagine Klaus Kleinfeld and ergen, poker players with james bond. When we come back this morning, is bank of americas big runup over Credit Suisse this morning. What does the future hold for the automaker. And one more look at futures this morning as we put earnings season into context. A lot more squawk on the street back in a moment. More trouble involving boeings 787 dreamliner. Japan canceled a flight scheduled to fly from western japan to tokyo today, citing a brake problem. Its setbacks this week. Yesterday a fuel leak forced a 787 to cancellation at bostons logan airport. Take a listen to what the boeing ceo told phil lebeau about the dreamliner a few weeks ago. Were having what we would consider the normal number of squawks on a new airplane, consistent with other new airplanes weve introduced. This is an issue were chasing down. We regret the impact on our customers obviously. But i would put this overall in the normal introductory squawk kind of level. And you know whats interesting about this, jim, is a lot of analysts on the street are saying these are teething pains with any new aircraft out there. We saw that with the airbus, they had a cracked wing problem. You know what their stock did that year . More than 25 gain. Phil talked about that yesterday. Remember, the alcoa quarter, 8900 orders for planes, substantial number boeing. Mcinearney . This is an era where there are cameras on planes. Ive watched the smoke coming from that thing. The first thing i said, shoot, man, im flying to new orleans, and i hope its a 737. You know, this is the mindset. You want to raise Awareness Regarding airplanes in this country . Put it on the cover of usa today, which is where it is right now. Raising questions about the dreamliner. The journal points out that the longer it takes to fix the problem, you get paid on delivery, boeing cash flow might be a story. Might be a story at some point. This is going to be the breakout quarter for boeing. Stock traded up, making a run. One of the best stocks i dont know. You dont think this is a moment to fear . Oftentimes in stories like these, there is a moment of fear in which they can say that was the boeing bottom. The moment is to sell boeing and buy united technologies, which is in both airbus and boeing. Ive got to tell you, the headline risk in boeing is just when i saw phil lebeau came on yesterday, i thought, there are no order numbers. In their defense today, the head of Qatar Airlines said if there was a real problem, they would be grounded. Boeing is the greatest Airline Company in the world. I was on a boeing plane that got hit by lightning. Boom. I thought it was absolutely lightsout. Everyone else is like we land. Boom. You know what . Boeing had a second redundant system, turn it back on. Boeings the best Engineering Company in the world. Theyll solve the problem. Hard to argue with that. Which path of profits should you follow today . Cramers on the case. Look at the mad dash next. Sheila bair speaks out about the debt ceiling and would she be willing to become the next treasury secretary . One more look at futures, when were back in a minute. At 1 45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. Surgery was successful, but he will be in a cast until it is fully healed, possibly several months. So, if the duck isnt able to work, how will he pay for his Living Expenses . Aflac. Like his rent and car payments . Aflac. What about gas and groceries . Aflac. Cell phone . Aflac, but i doubt hell be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a getwell card at getwellduck. Com. [ male announcer ] send the aflac duck a getwell card living with moderate to semeans living with pain. Is it could also mean living with joint damage. Help relieve the pain and stop the damage with humira, adalimumab. For many adults with moderate to severe ra, humira is clinically proven to help relieve pain and stop joint damage. So you can treat more than just the pain. Humira can lower your ability to fight infections, including tuberculosis. Serious, sometimes fatal events, such as infections, lymphoma, or other types of cancer, have happened. Blood, liver and nervous system problems, serious allergic reactions, and new or worsening Heart Failure have occurred. Before starting humira, your doctor should test you for tb. Ask your doctor if you live in or have been to a region where certain fungal infections are common. Tell your doctor if you have had tb, hepatitis b, are prone to infections or have symptoms such as fever, fatigue, cough, or sores. You should not start humira if you have any kind of infection. Ask your rheumatologist about humira, to help relieve pain and stop further joint damage before they stop you. Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Another day, jim, another analyst saying nice things. Goldman assumes coverage with a buy. Let me tell you what a bargain really is. This company is only selling at 77 times earnings. This has finally gotten cheap. I marvel at how people are willing to suspend any sort of earnings valuation on this one stock. And one stock only. With the exception of perhaps facebook, which keeps going higher because of their big meeting next week. Amazon is saying, third party, doing great. They fulfill. And this is just a continuation of the end of bricks and mortar in the beginning. The internet. You know what, i cant get out of this juggernaut. This is the most amazing phenomena ive ever seen. Youve got to go to the amazon house in new jersey and see whats going on there. Goldman talks about margin expansion, where a lot of people see that as this guy is about world domination. Does he also want to dominate the union verse . Outer space is the other place. Im not going to get involved with someone who wants to dominate the universe and has the fire power to do so. When we come back, could the clouds hanging over General Motors much of last two years finally be lifting . Phil lebeau will talk to Daniel Akerson from gm in just a few moments. Pure gadgets and all things mobile. Get a jumpstart on the tvs and smartphones of the future, on smartphones of the future, on the next hot device. Oline. I am probably going to the gas station about once a month. Last time i was at a gas station was about. I would say. Two months ago. I very rarely put gas in my chevy volt. I go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and its not just these owners giving the volt high praise. Volt received the j. D. Power and associates appeal award two years in a row. [ male announcer ] how do you turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. You are watching cnbc squawk on the street live from the Financial Capital of the world. The opening bell set to ring in just about a minutes time. Earning season kicked off last night with alcoa. The read on that has been pretty good. A Little Mystery today as well, jim, with facebook, saying theyre going to have an event on january 15th. The invite says, quote, come and see what were building, and thats about it. I have been a believer in facebook ever since they did the mea colpa. You know what, these guys, they are taking share and taking names. They offer a new product, well love it, whatever it is. Its going to be interesting to watch. What a run theyve had. Now contributing more to the nas 100. Lets get a look at the opening bell. Over here at the top of the screen, the s p 500, the Community College of manhattan celebrating their 50th anniversary. Watching facebook soaring out of the gate. It is up by about 2 . Right now seeing a little bit of pressure on the open. Reports in the wall street journal about a lower end iphone that could be launched as early this as this year. Down by half a percent. Green arrows pretty much green across the board. The Consumer Electronics show out in las vegas, a lot of talk about the ultra books that are being launched and how thats going to help intel. But also the hugh lets of the world and dells of the world. This will spur people to buy new computers. I dont know if the ultra books will really do it, but thats the buzz. Bernstein said its worth 29, some of the parts. Hewlett . Yes. They look at what pc companies have gone at. They talk about consulting. 29 on a breakup . A big number. Isnt that huge . Yes. Its 15, 16 now after three days of gains. Ive been very negative about hewlettpackard. This bernstein note is authoritative, rigorous. Tonys an experienced guy. Again, i think these kinds of conversations will be more significant when they take place towards the end of this year. If you have not seen any meaningful signs of progress. Well, you know, the fact is that it was a Great American brand name, with a Great American product. And, you know, its interesting to think it hasnt been so destroyed, commodity business, theyre using a breakup value of dell to 12. Hewlett does have a lot of drivers. I do want to take a brief look a live picture this morning of south street seaport in manhattan, where earlier this morning, according to the fdny, a boat hit the deck, what theyre calling a hard landing. So far, fdny said 17 injuries, all assessed on the ground. No ones been transported yet. I think its the sea streak, a boat that does a lot of tours around the new york area. Pier 11 is currently closed. Well get more details on that as they become available as well. Have we done the nac yet . No, we have not. The call this morning Credit Suisse Downgrading Bank of america to neutral. Theyre saying that actually, theyre increasing the price target. Saying right now, its trading at 11 times 2013 earnings. That compares to about 8. 5 with jpmorgan and citi. Its discounting too much in the stock, too much cost savings. That will be wrung out from the servicing operations. Thats the 2014 story, not a this year story. Its trading a little bit ahead of itself. You could make the case that make the efficiencies dont come through, that perhaps Brian Moynahan has put behind problems and thats why the stock was up more than 100 last year. I dont want to get in the way of this group. I think the surprise is that the earnings are going to be better than expected for the whole group. Unfortunately, wells is first. They had the worst than expected quarter, in part because they are expanding nationwide, spending a lot of money. I think bank of america is okay. I like it. This kind of pullback you like, 1 pullback. Its not much of a pullback. Isnt it funny when a guy downgrades it, but still raises his price target. Im always suspicious of that. Especially when you also lower the estimates on bank of america. Its curious. Hes also forecasting, just for the broader sector, 3 basis point decline for year on year margins. Wells fargo, of course, reporting on friday. Thats something to watch. Are we hearing similar things from wells fargo in terms of what theyre anticipating this year . Oppenheimers comment on key, everyones going to have negative margins. The question would be, can you have upside revenues, commercial real estate lending. I think you will. I think First Horizon said that could possibly be. I like the regional banks as the play for 2013. We mentioned dana at the top of the show. That is a new 52week high, maybe longer than that. Higher than expected q4 revenue growth. Remember dana has moved heavily into the test and measure business. Thats why one of the reasons agalin is up. Stryker better than expected. Danaher has medical devices, because of the Affordable Care act, alcoa being better than expected. Earnings seasons starting off with a bang even as the negativity is pervasive about earnings. Constellation brands is soaring right now, up 2. 7 on both the eps and revenues. Really strong. Look at that. People are drinking. They are drinking, and that is helping. Its the truth. Theyve done so many things right. So has di aggio. It turns out that the assets were worth a lot of. Beer is worth a lot. Johnny walker is a very good friend of mine, not as much as captain morgan. Diaggio. Gm shares up almost 2. 5 this morning. We may be speaking with mr. Akerson, saying positive things, in terms of the goals he has for his tenure at the company. Hes 64, but no plans for stepping down. Cadillac a global brand, increasing chevrolet, getting the government out of the shares. Phil lebeau reporting on that. The alcoa call, they talk about how sports utility vehicles are growing in china. Thats gm. Thats gm. Yes. I want to know about the selfdriving car. 15 years . Google is going to have selfdriving cars all over the place . If apple had that, i would shave about 10 of apples googles going to have wifi. Connect into google, ask for a car and theyll run the Taxi Services all over the place. Wireless call will appear wherever selfdriving taxis. Thats a great idea, faber. The brain on you is amazing. Boeing shares up 2 . It was interesting in yesterdays session, this is what mike pointed out yesterday on fast, and there is a change in sentiment yesterday during the session in the options pits. Very, very bearish. And toward the end they were getting bullish on the stock. Willing to get in at the lows. That was as it turns out the lows in this sort of week of debacles for boeing. Those shares are higher today. People are going to give them the benefit of the doubt. Airbus has had a lot of problems. These are really hard planes to build. They switched that new composite, went away from aluminum. I come back and just say, once again, if you doubt boeings prowess, you havent studied them, from the b29 and b17 on, Great American company. Theyll solve it. In the interim i think people will say we havent seen big cancellations. No, we havent. Lets check in with bob pisani on the floor this morning. Happy wednesday. This is the first day of the week weve had a positive opening. At least were moving in the right direction. If youre all bullish here. Were starting what i call a groundhog day for earnings. This is a very old reliable dance that we are now about to engage in. I want to give you some indicators of what i think will happen here. This has been going on for a very long time. We know a couple of things are going to happen. Companies are going to come in with a very predictable pattern and the analysts are going to be part of this whole game going on. The first pattern ive noticed over the two years, expectations going into earnings, then the Companies Beat by about 3 percentage points. Heres where were going right now. 3. 2 , thats what the estimates are, for what the s p 500 are going to do for earnings in the Fourth Quarter. 3. 2 above the Fourth Quarter of 2011. If these patterns occur the way they usually have, the final number, we wont know it for a few months, will be up 6 , earnings up 6 in the final number, if the historical pattern beats by about 3 percentage points. This has gone on for a very long time. The second is, the percentage of companies that will be beating, its very reliable as well. Its about 62 . Its been around that 60 , 66 for ages and ajsz. In fact, thats the tenyear average. 62 . Nearly twothirds of the company. There are those two patterns. Alcoa, very positive comments on china. Look at the numbers, very carefully. They were talking about doubledigit growth in heavy trucks. And high singledigit growth in automotive, building and construction and beverage and packaging. Thats very good news overall, for multiindustry companies. Companies that sell across many countries and many different kinds of products. I dont think alcoa is a bellwether. But this is very important comments. I think theyll have knockon effects for these companies. United technology, rockwell automation, honeywell for example. I think thats where its important. Alcoa, theyre slated for price of aluminum and dependent on their ability to cut costs. Theres smelting reductions last year in europe and in the united states, and more efforts to cut costs. Thats the main way theyre going. Im sorry to say this, alcoa is not a stock bellwether and hasnt been for a long, long time. Alcoa stock has gone nowhere, zero, in four years. The materials sectors, which it is a part of, has doubled in that time. Just a fact there, jim. I think you know that as well. But china really positive news there. Absolutely, bob. I think that theres a disconnect between the forecast that alcoa gives you on its product lines and how much money alcoa can make. I totally agree with your analysis, unfortunately. Because i like the company so much. Rick santelli in chicago. Go ahead, rick. Thanks, jim. Before we get to the charts, i didnt put a currency chart up, but obviously the dollar and many currencies are resuming, upward trajectory against the yen. Keep a close eye on the 88 level of the dollar yen. Twoday chart of 10s clearly shows you were losing altitude in terms of higher rates, lower prices. As a matter of fact, one of the reasons many are now putting forth that we had so much selling pressure early in the year and towards the end of last year was the huge corporate issuance calendar. About 15 billion yesterday. Lets look at the markets from that perspective. If you look at the lqd etf and look back to november, you can clearly see that it is definitely not holding up towards the highs. But if you look at the high yield i yielding, different story. Even though corporates are moving very well, in terms of issuance, there still seems to be the reach for yield propensity associated with the junk high yield. If you look at it from a spread perspecti perspective, thank you barclays, its definitely coming up just a bit op the spread. Remember, the selloff in treasuries wasnt shared by the corporate market. Look at the high yield barclays as well. These are very competitive levels. It doesnt surprise me, it wouldnt surprise me to see this issuance last for a while. Jim cramer, back to you. Thank you so much, rick. Always good to hear from you. Great debate this morning. Lets check out the latest news in energy and metals. Sharon epperson at the nymex. Gold, as you mentioned, stabilizing here, right around 1660 an ounce. Silver around 30 an ounce right now. There are a lot of analysts saying theres a lot of resistance here in the Precious Metals market. We may see lower prices before prices start to move higher again. But there are some prices that are moving higher in the metals complex in the white industrial metals, and palladium in particular. The best commodity so far in todays trade. Were looking at supply issues that are helping the palladium marketplace. Keep in mind were looking at record car sales as well in several countries around the globe. And that is also helping to cause some question about the supply issues. That is something that is helping play in prices. Keep your eye on the Energy Market as well. Mixed picture here. Natural gas continues to be under pressure with the warm temperatures were seeing. New york will be 50 degrees today. Were going to be talking more about the crude oil supply picture here in the u. S. , particularly after the Energy Departments report yesterday saying that by 2014, well see a 25 jump in production from where we are right now. Well talk to tradition energies, addison armstrong, at 10 30 about that, and bring you the weekly Inventory Data live. Still to come, a cnbc exclusive interview, dan akerson, announcing plans to sell stakes in the automaker. And the former treasury adviser, what is his solution to the debt ceiling standoff and who should succeed tim geithner as treasury secretary. All that coming up next. This is 100,000. We asked total strangers to watch it for us. Thank you so much. I appreciate it. Ill be right back. They didnt take a dime. How much in fees does your bank take to watch your money . If your bank takes more money than a stranger, you need an ally. Ally bank. Your money needs an ally. The social media still have room to run . Julia boorstin caught up with sales force. Com in a cnbc exclusive to talk about how facebook and twitter are impacting business. Every companys trying to connect with their customer in a whole new way. In what role does sales force now play and what are the Business Tools you offer . Weve built an incredibly new cloud. We spent 1 billion in acquiring companies, just to be able to show our customers exactly how to connect to their customers. Whether youre connecting on facebook, whether youre connecting on twitter, whether youre listening like were doing right here at our social media command center. Obviously this is a stock you follow very closely. You talk to marc all the time. Can he compete against larry elson . I think theres room for both. Larry states his company. Steve jobs, hes one of his initial advisers. I believe hes doing a lot of work behind the scenes, powering facebook, powering ge. Facebook and twitter are going to announce a tiein next week. Sales force is tied in with everybody. The last quarter was remarkable. He gave you a primer. Hes money. Benioff is money. You keep demanding these kinds of things, hes going to give it to you. I took a couple of years of classes of accounting, the s. E. C. Is looking to him to figure out how to do this software accounting. I sure hope that i wish hewlettpackard had used him. Because they never would have bought autonomy, if they had listened to him and looked at benioffs accounting. No one knows exactly what it is, this invitation to members of the media yesterday afternoon, for an event at the headquarters in menlo park next tuesday. The only clue facebook is giving are the words, come and see what were building. That brings us to this mornings squawk on the tweet. Question, what could facebook possibly be building . Tweet us. Weve got your responses throughout the morning. Do you think its a physical build or do you think its a building in terms of a platform or boy, i tell you, zuckerberg is he this guy has ideas that i cant think of. You know, youve got 1 billion users. Like steve jobs always did, not what we think we want, but it turns out that we must have. Im a believer in the guy. I reiterate that this company is actually going to be perhaps one of the greats. And you talked, carl, about valuation. They could buy anybody. Theyve got a ton of money. It is true. Trading almost at 30 here for the first time in a very long time. Well keep a close eye on it. Well see what happens today. When we come back, twitter, tumbler, four square, all in the portfolio of one Venture Capital firm made early and now profitable bets on those companies. Well find out what hes looking at next. But first coming up, take a look at this. Those dolphins know whats happening next. And theyre rushing to make sure they dont miss it. Six stocks in 60 seconds when squawk on the street returns. [ male announcer ] some day, your life will flash before your eyes. Make it worth watching. The new 2013 lexus ls. An entirely new pursuit. Humans. Even when we cross our ts and dot our is, we still run into problems. Namely, other humans. At Liberty Mutual insurance, we understand. Thats why our auto policies come with accident forgiveness if you qualify, where your rates wont go up due to your first accident, and new car replacement, where, if you total your new car, we give you the money for a new one. Call. To talk to an Insurance Expert about Everything Else that comes standard with our base auto policy. And if you get into an accident and use one of our certified repair shops, your repairs are guaranteed for life. Call. To switch, and you could save hundreds. Born to make mistakes Liberty Mutual insurance. Responsibility. Whats your policy . Turning into a busy news day. Simons telling us whats coming up at 10 00. Finding new roads for the chevy. Well talk to the ceo of General Motors, hell join us live. Sheila bair will grab the subject of the new treasury secretary by the horns. Well talk to the Credit Suisse analyst Downgrading Bank of america. That, and more, in the next hour. In the meantime, jims here with six in sixty. Bank of america, bill mcdermott, i believe in this company. Lululemon . People feel its lost its momentum. A call says, listen, numbers much better than expected. Citi price target. Number one housing play. I think the stock could go to 34, no problem. Raymond james on mcdonalds. Theyre saying the innovation wings, maybe not hot enough. The numbers under pressure. Wells fargo says expansion. Apollo group. Oh, my. Profit for profit education, schools starting to look like nonprofits. You want to invest, invest in yale. I like cornell here. Goldman says nice things about both mastercard and visa. Paper versus plastic. Were sticking with these biotechs. This is a company that helps people with ms walk. Jim foster, he has brought down the cost of bringing new drugs to the market. I think this conference is about why you need to back American Health care companies. Because they innovate. Look forward to that, jim. Youve had quite a week already. Youve got a pick . Cutler drove that company, that team down. By the way, rg3, let me just say, i want a speedy recovery, because he is the best thing thats ever happened to sports in my lifetime. For washington, some say, reports hes in surgery, even as we speak. Is that true . When andrews was in the huddle, didnt that freak you out . Oops, thats too brent mussberger. Still to come, shedding the stigma of government motors. The exclusive with dan akerson. And then former fdic chair sheila bair for the search for a new treasury secretary, which news developing as we speak. Im all fired up. Keep it right here. What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Thats a good thing, but it doesnt cover everything. Only about 80 of your part b medical expenses. The rest is up to you. So consider an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement plans, they help save you up to thousands in outofpocket costs. Call today to request a free decision guide. With these types of plans, youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and youll never need a referral to see a specialist. Join the millions who have already enrolled in the only Medicare Supplement insurance plans endorsed by aarp. And provided by unitedhealthcare insurance company, which has over 30 years of experience behind it. With all the good years ahead, look for the experience and commitment to go the distance with you. Call now to request your free decision guide. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. I am probably going to the gas station about once a month. Last time i was at a gas station was about. I would say. Two months ago. I very rarely put gas in my chevy volt. I go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and its not just these owners giving the volt high praise. Volt received the j. D. Power and associates appeal award two years in a row. Welcome back to squawk on the street the. Road map for the next hour, Credit Suisse Downgrading Bank of america. Citing valuation as the shares sit up over 12 in the last month alone. Is the big runup coming to an end . And our exclusive interview with General Motors ceo dan akerson now that the treasury is selling its remaining stake in gm. The president could name a new treasury secretary to replace tim geithner as early as this week. Former fdic chair sheila bair is here on what that could mean for the debt ceiling debate. Another day, another bank call. This one, though, in the opposite end of the spectrum from what weve gotten recently. Credit suisse Downgrading Bank of america citing valuation cause for concern. Pleasure to have you with us. Thanks for having me. Seems like the primary driver behind this is the huge run weve seen in bank of america, the fact that right now its trading at a multiple of 2013 earnings that exceeds jpmorgan as well as citi. Does that imply that where citi and jpmorgan are trading, is that where bank of america should be trading . No, its not at all. Because bank of america does have a lot of Cost Reduction opportunities. On 2014 estimates, its only one multiple point difference than 2 1 2. It narrows over time. But the issue really is, you know, are those cost cuts going to come in a Straight Line and could there be any interruptions. This almost sounds like a trading call at least for the near to intermediate term to switch out bank of america and go into a jpmorgan and or citi. We definitely prefer jpmorgan or citi. Were not looking for anything specific negative to come from bank of america, but i think youve got better value and performance in either of those two. In terms of the c car, what youre anticipating in terms of bank of america and in what form . So were actually looking for only about 10 capital return in 2013 from bank of america. A big step up from where it was. And that takes the dividend from a penny to two pennies, and kind of a 500 to 700 million revenue. Up from where it was. Ill give you a chance to comment on the fannie mae deal announced earlier in the week. To what degree is it really putting past skeletons behind them . Some say its more of an incremental move. But some say any progress is good progress. That puts that skeleton behind them. The issue with bank of america Going Forward is it still has a private label exposure, which could impact the earnings in the future periods. Certainly in the financials last year and going into this year, have had tremendous runs. Bank of america the beneficiary probably the most of that run. In your universe, are there other names where the alarms are starting to go off in terms of the valuations at which they are trading . No, i dont think so. I think 2013 is going to be about execution and performance. We think most of the Earnings Growth is going to come from kind of cutting costs and returning capital. Thats the hard work part. Those who do the better job will actually, you know, see that kind of manifested in their share prices. B and a got ahead of the pack in terms of the 2012 performance. Where are you on wells fargo . Theyre reporting on friday. Arguably its in a different position due to the emphasis on mortgages and housing market. Fundamentally we like wells fargo a lot. They get hurt in a low rate environment, theyll be helped a tremendous amount when short rates move up, and investors have not yet been willing to believe that the mortgage profits are sustainable. Even though wells has got 30 market share of the mortgage market, which over time should be a positive. Its just theyre not willing to give them full credit for it yet. Moshe, thanks for your time. Thanks very much. I did want to discuss some breaking news on Morgan Stanley. The company, a number of news outlets reporting job cuts coming there. We can confirm and clarify some of those reports. Morgan stanley sources close to the company indicating they will cut about 6 of its overall institutional securities, and infrastructure staff. Those cuts will total 1,600 jobs, half would be international, half will be domestic. Again, 6 of securities and infrastructure. Now, putting that in perspective, the company has 57,000 total employees. Some have reported 6 overall, that is not correct. Again, if you do the math, it would be 1,600 total. Theyve been a business in which they have been hard to come by significant profits. Margins have been compressed. And Morgan Stanley continuing job cuts there in addition to infrastructure. By the way, the firm did cut about 6 total of its employees worldwide across the board last year. So continue downsizing on wall street. We want to move on to another story, dish network trying to trump sprints office for clearwire. Dish offering 3. 30 a share. Thats about 2. 3 billion in what is a very complex, difficult game of, i would call poker. Involving charlie ergan, who controls dish, and a lot of spectrum at this point. Also controls debt of clearwire, involving sprint and its soontobe partner softbank. And there is charlie ergen. Also involving the special committee of the board of directors of clearwire, which is representing the interests of the minority shareholders. And minority shareholders themselves. Where does this end up . Very hard to say. What are mr. Ergens actual motives . The likelihood he would purchase clearwire at 3. 30 or any price is highly unlikely. That being said, the special committee of the board of directors, my sources tell me, is certainly working as it should to try to see if there is a workable plan to get the minority shareholders more than the 2. 97 a share they currently are receiving, in a deal that was agreed to by the special committee with sprint. Owning roughly 50 of clearwire shares at this point. A lot of rights that its not going to give up in any way, shape or form. So the question becomes, will they still try to come up simply to move this process along in a rapid or more rapid fashion, or do they say, 2. 97, thats it. Were not going any higher. So well see. Interesting situation that is going to develop over this next month. Well see where it ends up. Clearwire shares, of course, up roughly 9 . But trading well below the 3. 30. Turning into a pretty interesting setup here. Like a tarantino film of some kind. Breaking news on herbalife. Andrew is back at the breaking news desk. Thanks, carl. Dan loeg buying a stake in herbalife. The filing just coming moments ago in a 13 g, which suggests its a friendly passive investment. This disclosure, heres the big part of it, is pitting against big ackman. An unusual public fight. Ackman shorted more than 20 million shares of herbalife calling it a pyramid scheme and said the stock will go to zero. Loebs disclosure comes a day before herbalife will make a presentation in new york to respond to ackmans allegations. In the interview with bill ackman itself, we brought it to you last week. Ackman revealed his short position back on december 19th. But theyve risen in the last week, as you can see there. Im hearing other investors have taken long positions or added to their positions, betting ackmans campaign wont persuade regulators, including the s. E. C. And ftc to take action. Worth noting, as herbalife mentioned numerous times, the ftc has looked at the company before and taken no action. Many say they admire bill ackman, investment of 60 million, rising to 2. 3 billion. But for all his public success, hes also had a couple of misses. The conference back in 2011, he disclosed a big bet on the hong kong dollar that hasnt worked out. Then theres the recent bet on jcpenney which we talked a lot about before, and so far has been a losing one. And the investment in target which didnt go anywhere. Loeb known for successfully taking on yahoo last year. They came off a very successful 2012, returns of more than 21 . But right now, lets take a quick look at shares of herbalife. They are rising on this news. And weve been looking through the filing here. Looks like, its about 8. 2 they have over wow. Thats more than we thought. Its actually 8. 24 of the company that they have bought. We dont have the price. Andrew . Yeah . Thats halted. Herbalife shares are halted right now. Obviously because of the pop in the shares. 41. 85 is the last share on herbalife. Andrew, im curious, is it possible dan loeb is simply playing a short squeeze . The shares are up 48 since december. This thing could just pop, and that could be an easy gain for him. I wouldnt dissuade you from that view. I think theres been a big question whether there would be a squeeze, a short squeeze ultimately on bill ackman and when that could happen. Again, we dont know if this is a longterm bet. We dont know if this is a shortterm bet. I imagine its a bet over at least some perld of time. So i dont think were necessarily seeing him disclose this right now and getting out tomorrow. But i do think it definitely adds to the drama of the whole herbalife story. Andrew, you say drama. Bill and dan are friends. Right. I mean, and i think theyve worked together in certain situations. Yeah. I can just imagine the conversations here. In fact, if theyve even had them. Very interesting part of this as well is the two of them on opposite sides here. Dan, of course, taking very public position now in pure opposition to mr. Ackman, whos been nothing but public on his belief that this companys a fraud. You know, that is the remarkable part about it. I think this story, which greenberg has done a great job reporting on, hes got a documentary in the next two days on herbalife, this is one of the stories that becomes perhaps as much about herbalife and its future as it does about the Hedge Fund World and both of these gentlemen. Andrew, do you know if i dont know if youve been in contact with dan loeb. Is he donating shares in this trade to charity . This would be an interesting twist. We will put calls in it just crossed the wires. Well be putting calls in to both of these gentlemen throughout the day. Interesting. You mentioned herb thank you very much. Herb tweets a lot of investors in his opinion are buying against ackman because they dont like the way ackman has been so public. An interesting strategy. Donating any proceeds, or i should say profits. I pointed out ackman i believe is in the process of raising permanent capital as well. In this world, it certainly doesnt hurt to have a fairly broad and wellknown reputation in some way if youre out there. Even if youre going to spend the profits on charity, nonetheless you do benefit if youre right from your ability to raise capital. Which, again, i believe he is trying to do. Busy morning here on cnbc. After the break well have an exclusive interview with the ceo of General Motors. His first interview since we learned that the government is going to finally sell its entire stake in gm within the next year or so. What does it mean for taxpayers . What is on the line for gm moving forward . Theyre trying to take chevy worldwide now, dropping the chevy runs deep campaign. Well talk to dan akerson next on cnbc. At farmers, we make you smarter about insurance. Because what you dont know can hurt you. What if you didnt know that boxes by the curb. Make you a target for thieves . Or that dog bites account for a third of all home liability claims . What if you didnt know that one in seven drivers is uninsured . And that grease fires have to be smothered . The more you know, the better you can plan for whats ahead. Get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum lets look at the shares of herbalife. Trading higher by about 4 here. Dan loeb taking an 8. 42 stake in the company. This seemingly goes against the short bet that bill ackman of pershing is making in this company. This comes, of course, a day before herbalife will make its case to analysts why ackman may in fact be wrong. That is happening tomorrow. Interesting development in this ongoing saga. Herbalife, this multilevel marketer of Nutritional Supplements and such. Interesting story were watching. Last ten trading sessions, up 56 . You dont see that too often. Thats going to get more interesting. In the meantime, strong sales on wall street has gm stock picking up some speed. The Worlds Largest automaker up 46 in the last six months. Now for the First Time Since the government announced its selling its stake in the automaker, ceo dan akerson is speaking out. Good morning, carl. Im joined at gm headquarters by the chairman and ceo of General Motors, dan akerson. We showed your stock chart. Up 46 in the last six months. Do you feel as though youre starting to turn the corner in terms of growing the profits . Youve been profitable, but growing those profits . Well, i mean, since we emerged from bankruptcy, weve generated about 20 billion in profits, adjusted about 16 billion straight net income. Its been a whirlwind couple of years. I do think that the company now, leading into the bankruptcy, we kind of starved our capital programs. And we didnt have a whole lot of new product introduction. In this industry, its about product. It all starts and ends with product. This year, in 13 and 14, over the next 12 to 18 months, 70 of our products in this country are various brands and models, will either be refreshed or brandnew. So we had to kind of take a deep breath after we emerged from bankruptcy, generate cash. Weve done that. And with a reasonably, quote unquote, old portfolio, we are now going to really come into some good days. Were going to talk about that in just a little bit a little bit more extensively. But how much of a difference did it make having the federal government finally come out and say, explicitly, we are unwinding our stake in General Motors . Well, look, well always be appreciative and thankful for the hand that was extended to us, leading into bankruptcy. I came in after the bankruptcy, so i was a student of the subject. Now im the practitioner. Its good in the sense that it says this chapter in our history will close. And well become a company thats owned by the market, not by partially by the government. I think thats a good thing for our employees. I think its a good thing for our shareholders. And i think its a good thing for the market more broadly. Did you understand where there were shareholders, or even people going into your show room, you know, thats government motors . Im not touching it. Did you understand it . Did you ever get frustrated . Well, i understood it. And to a certain extent it was a price we had to pay, if you will. We knew the par gain, at least the management, the bargain that was struck. It was out of necessity. I think weve fulfilled the promise that that investment represented. And turning the company around, and being profitable, and expanding not only here in the united states, but around the globe. So, yeah, it frustrated me at times. But at the same time i knew at some juncture they would what theyve done is articulated a plan theyll do so. Lets talk about your business here in north america. Your market share is down at 17. 9 . The lowest its been since the 1930s, maybe the lowest its been since General Motors was formed. And it brings up the question, you continue to lose market share. People look at this and they say, at some point youve got to stabilize that. What do you say to critics who say, these guys are going to be down in the 12 , 13 range in the u. S. , and were going to continue to see them lose market share. I would say theyre wrong, those critics you say. I dont know who they are. What do i say . Well, first of all, last year, in 11, we peaked up. In large measure because of our foreign competitors, japanese competitors, suffered. You have to look at it over a 24month range. Actually were up slightly if you look at 10 to 12. And i dont know what people say in 10, or 12, but it is what it is. There are a couple of things that are important. We are producing great cars. Our jd power initial quality, were the leader domestically and competitive with most of our all of our foreign competitors. Were recommended now by consumer reports. 16 of our models up from 11 to 45 increase in one year. Those are good stakes, if you will, in the ground that we can kind of anchor ourselves to. Then if you look at, are we able to price, baurgs the products are more reliable, theyre beautiful in their execution, yeah, our pricing, our average transaction price is the highest in the industry in the united states. Our residuals, what does a car sell for, alltime highs. And our retention is growing. So, yeah, im optimistic in what this new product onslaught, if you will, it will be a renaissance for us in the next couple of years. Dan simon has a question for you in new york. You said earlier it was all about the product. Is that your diagnosis of what went wrong in europe, in latin america, and arguably china . And is the answer now the chevy and the reworked International Advertising campaign . Well, Advertising Campaigns dont dictate why people buy your product. Theyre important, but more important is the fundamental product. Actually, in china, we grew market share last year. And im quite confident that well continue to grow in china. We were unprofitable in latin america in 2011. We were profitable in 2012. We introduced new products in latin america. In fact, we introduced a new chevy onyx. We expect that will be 25 of our total volume in 13 and 14. When you look at europe, europe is not so much product driven in the near term, it will be in the intermediate term. But its more of a Macro Economic where the economic picture outlook is pretty weak. But that being said, weve entered two new segments in europe, both in what we call the b and c segment and a segments that we heretofor werent. Were guardedly optimistic we can cut our losses in 2013 and hopefully break even by middecade. Real quick, i hate to make it a yes no question, can you double your profitability by 2014 . I dont know. Well see. First time i make a prediction like that, its going to be hung out to me in some way. Obviously we are striving and making progress on many fronts. Internal, basic operations. But i think our margins will expand, yes. Dan akerson. Melissa, that is the closest youll get on them saying theyll double their profits by 2014. Which some on wall street are predicting. Thank you so much, phil lebeau. General motors shares hitting a fresh 52week high. We just heard from dan akerson. Steven ratner at the forefront of the Auto Industry bailout, thats next. Im up next, but now im singing the heartburn blues. Hold on, prilosec isnt for fast relief. Cue up alkaseltzer. It stops heartburn fast. Oh what a relief it is cue up alkaseltzer. It stops heartburn fast. Are you flo . Yes. Is this the thing you gave my husband . Well, yeah, yes. The name your price tool. You tell us the price you want to pay, and we give you a range of options to choose from. 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Change your number. Turn it up. Androgel 1. 62 . Welcome back to squawk on the street. Weve just gotten the news that walmart is confirming that it in fact will attend a meeting with Vice President joe biden at the white house tomorrow. Walmart saying that theyre going to send an official to the white house, saying in a statement here just released that there appears to be a snafu about who was going to attend this meeting tomorrow at the white house, saying knowing our Senior Leaders could not be in washington this week, we spoke in advance with the Vice President s office. We underestimated the expectation to attend the meeting on thursday in person, so were sending an appropriate representative. Guys, very controversial series of negotiations behind the scenes going on over at the white house. Now we know walmart is going to be participating. Back to you. Thank you very much. What will it mean for the euro if the ecb cuts Interest Rates at 8 00 a. M. Tomorrow morning . Good morning. Positioning for a cut . Im positioning short. But i dont think theyre going to cut this time around. Theres so many reasons for the ecb to want to cut rates. I think were looking at an actual cut three months out. German Economic Data has been pretty weak. I feel like that the position for euro wants to go to the downside. We saw poor german data, obviously the core of the european union. And the reason the ecb hasnt let the euro go. I think theyre going to prep the markets next time for a cut. What are your levels . Well, 131. 20 was interesting. A level we tried to break through all fall. We finally got above it. Now the market in the technicals should be support. It didnt hold the support. You want to go short the euro. Are you a dollar bull overall . Are you getting behind other trades on the basis that the greenback could go higher, higher Interest Rates in america . Absolutely, simon. The dollar has this underlying bid ever since the fed minutes last week. It really seems like qe infinity is just to the end of 2013. The dollar rallying against the yen. I want to be short euro, right around current levels, right around 1. 3050. Put a stop loss above the old level, 1. 50. And the break around 1. 2850. Thank you for your time. Todd gordon joining us there from aspen trading. Catch money in motion on fridays at 5 30 eastern with melissa. If you wanted more education about currencies, go to currency in class at cnbc. Com. Right after the break, former fdic chair sheila bair on the debt ceiling, and financial reform. Dont go away. [ cows moo ] [ sizzling ] more rain. [ thunder rumbles ] [ male announcer ] when the world moves. Futures move first. Learn futures from experienced pros with dedicated chats and daily live webinars. And trade with papermoney to testdrive the market. All on thinkorswim. From td ameritrade. [ male announcer ] some day, your life will flash before your eyes. Make it worth watching. The new 2013 lexus ls. An entirely new pursuit. Welcome back. Im Sharon Epperson at the nymex. Breaking news from the Energy Department on oil inventories. Oil supplies in the last week rose by 1. 3 million barrels. Crude supplies were up by 1. 3 million barrels. The big surprise was the big build in gasoline. Gasoline supplies rose by 7. 4 million barrels. Fuel supplies also a big increase there, up by 6. 7 million barrels. The big mover on this news, gasoline futures are at the lows of the session right now. Of course, the api, the American Petroleum institute, already forecast a big build in gasoline supplies as well. So that gasoline market was already lower. Im bringing in addison armstrong, the senior director of Market Research at tradition energy. In addition to your 2013 report, ive got to ask you about the huge build in gasoline and what that means for prices, and prices at the pump. It looks like things will be going lower. We had a big stock build in the Fourth Quarter already. Gasoline unprecedented build there. Demand continues to be very poor. So i think prices are definitely heading to the down side. Lets talk about your outlook for crude oil for 2013. We heard from the Energy Department yesterday, the eia put out the shortterm Energy Forecast saying well see a 25 jump in crude production by 2014. What does that mean for prices . Where do you see them this year . We see prices basically being pretty flat this year. Maybe a little bit higher, just based on problems in the middle east. Thats the only risk we see in the market this year. As a matter of fact, if we were to see a resolution in the conflict in the middle east, specifically in the negotiated settlement with iran, we could see crude prices down at 75. Weve been talking over the last several weeks about the pipeline capacity, and the expansions there, what that is meaning in addition to the production were seeing in the shale area, shale oil. What impact will that have on the spread between brent and wti . Its already come in several dollars in the last several weeks. Our expectation is because of those pipeline expansions, and because of the record production thats coming out of the u. S. , that that spread is going to come in a lot this year. We think its going to average about 10. All right. The final thing ive got to ask you about natural gas. Natural gas down 20 from the beginning of december. Where do you see it going . We think natural gas is really probably going to head lower, right here at the end of the winter. Inventories are going to be very large. The temperatures are not going to cooperate with the bulls. Theres a big short position in this futures market already. We think its going lower. All right. There you have it. Outlook for 2013. Were continuing to watch here gasoline prices in particular falling. Good news for drivers out there. Back to you. Sharon, thank you for that. And speaking of oil, international news, venezuelan president hugo chavez is supposed to be inaugurated tomorrow but hes still sick in cuba. What now . The first video of google executive chairman eric schmidt in a north korean computer lab. Michelle, good morning to you. That was my typo, computer lab there, carl. Lets start with venezuela, where we are waiting any moment now for the Venezuelan Supreme Court to decide whether or not it is constitutional to delay the inauguration tomorrow of hugo chavez. That is what he has supposedly asked for. Thats what the parliament there agreed to do. I say supposedly, because we havent seen him in nearly a month. Theres been no proof of life. He is in cuba receiving Cancer Treatment at this point. Could bring on a constitutional crisis in venezuela, because the constitution there says youre supposed to have an election within 30 days. If the winner cannot actually be inaugurated. Well see what happens there. Well show you whats going on with venezuelan bonds. Theyre widely held with a lot of fixedincome portfolios. Look at that, nearly 9 . When hugo chavez first got sick, venezuelan bonds rallied dramatically, because people thought, okay, theres now going to be more investment back in the oil infrastructure, that means there will be more likely to pay back the money. In the short term if you look to the right, yields have risen again because in the short term, this could lead to chaos. They have the largest reserves in the western hemisphere when it comes to oil. Moving on to north korea. We now have video, google executive chairman, eric schmidt, touring a computer lab in north korea, along with the former governor Bill Richardson who organized the trip. This is the entrance to the grand peoples study house. And youll see them looking at north korean individuals who happen to be allowed to be on the internet. We know its very few of North Koreans are actually allowed to be on the internet. Eric schmidt has not spoken to the cameras, but Bill Richardson has. He said theyre to push for the countrys end to nuclear ambitions. And also to push for the expansion of technology. Expand the internet, expand cell phones, thats good for the north korean people. They are both back in beijing tomorrow. Then back in the united states. At least the governor is on friday. We hope to hear from at least the governor, we dont know about eric schmidt. Google said this is a private trip, nothing related to google. That still hasnt cut down on the public outcry about it. John, good morning to you. Good morning, carl. I just heard from a source familiar with the process who says that president obama will name jack liu, his white house chief of staff, as treasury secretary, as early as tomorrow. A lot of speculation about this, and about the timing. Secretary geithner has said he would leave around the inauguration. Were about ten days away right now. So this is going to happen as early as tomorrow. Dont know yet on a decision about chief of staff. Theres a lot of speculation about ron claims, the former chief of staff to Vice President biden. Also dennis mcdocdoneo. Some talked about tom daschle. But dont know about a decision on chief of staff yet. John, thank you for that. Good piece of news there. John harward in washington. For some reaction on that, lets go to sheila bair who joins us this morning from washington. Good to see you back. Welcome. Thanks for having me. People had illusions that lew was a frontrunner. I cant imagine youre surprised. No. Its said hes highly partisan, tip oneils office, and exposure to banks with his experience at citi. Can he get approved . Well, i dont know. Its difficult to get nominees approved in the senate these days. I think thats problematic. You want good people to serve in office. We need to have a better functioning process in the senate for confirmation. That said, i congratulate him. I wish him good luck. Hes going to need it, if he is confirmed, obviously. The fiscal problems we have are going to need to be front and center. Financial reform is not going as well as it should, as the chairman of the oversight council, as secretary of the treasury, hell need to focus on that as well. Good luck with his confirmation, good luck with the job if he gets it. Is the job right for him . Is he right for the job . I dont know. I hope that we could have somebody with a broader perspective. I think we have had policies, economic policies, regulatory policies that have been too wall street centric. I like bulls. Hes got street experience who upses that. But he spent most of his career in government service, head of the North Carolina university system. Someone with a little broader perspective would be good. But mr. Lew clearly has the confidence of the president. And i think really, in terms of moving this nation forward, whoever the key players are going to be, we need to get them in place and take care of the fiscal problems that are a real threat to our country. Sheila, its simon hobbs. I hate to ask this of you, in the way you criticized geithner with his relationship with citi over the years. The editor at large of the International Financial review said Tim Geithners next job could be as chairman of citi. How would you react to that . Well, i hope look, i have said consistently that i dont think tim had a wall street job. His future, that he thought of that, or that in any way influenced his decision making. I hope he does not choose that path. For how long do you think he has to stay off wall street, in your view . Thats up to him. I think there are a lot of positions at universities, at think tanks, back in government. There are all sorts of Different Directions that people can go, who have had senior level jobs. Its going to be up to him what his next move is. But i think the optics of that would be really horrible. And i hope he doesnt pursue that. I think it would be very bad for him if he did. Sheila, were you approached about being treasury secretary . I wouldnt comment even if i had. So no, i have no comment on that. Let me rephrase the question in the context of an article on the front page of the New York Times this morning. That notes that obamas new administration looks to be basically all male. There is a concern that women are underrepresented. How would you respond to that criticism . Well, i would agree with that somewhat. We saw valerie on the front page. Within the white house. Shes the only senior woman. I have a lot of respect for her. But it would be nice to see more diversity, both in the cabinet and in the white house. So i hope this is something that theyve focused on Going Forward. With that said, you know, you need to look at qualifications, too, and people that the president has confidence in. But i would like to see more women. Perhaps in the white house, internally in the white house. Sheila, are you joining us on a week where major banks are putting even more legacy problems behind them to some degree . Varying degrees. Weve seen what the stocks have done in the past year. Weve seen them leading things like the dow. Are you surprised or impressed by their progress . Well, im relieved. I still think there are a lot of challenges ahead. The mega banks stocks continue to not perform as well as the more traditional banks, wellmanaged traditional banks. I still think there are a lot of uncertainties with the economy, with the fiscal cliff, with the monetary policy, the longterm ramifications of that. But im glad theyre working out their problems, slowly but surely. Maybe that will ultimately lead to a little more lending. But we havent really seen the benefits to help the economy as much as id like. Sheila bair, appreciate your time today. Thank you for having me. Sheila bair in washington. Thanks for having me. Take a look at the charts of aol over the past year. Theyre up more than 80 . Well hear from tim armstrong, joining us live from las vegas on what the Internet Company has in store for this new year. At 1 45, the aflac duck was brought in with multiple lacerations to the wing and a fractured beak. Surgery was successful, but he will be in a cast until it is fully healed, possibly several months. So, if the duck isnt able to work, how will he pay for his Living Expenses . Aflac. Like his rent and car payments . Aflac. What about gas and groceries . Aflac. Cell phone . Aflac, but i doubt hell be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a getwell card at getwellduck. Com. I am probably going to the gas station about once a month. Last time i was at a gas station was about. I would say. Two months ago. I very rarely put gas in my chevy volt. I go to the gas station such a small amount that i forget how to put gas in my car. [ male announcer ] and its not just these owners giving the volt high praise. Volt received the j. D. Power and associates appeal award two years in a row. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Weve got a decent bounce on the markets today. Lets look at the sector breakdown. Industrials and health care. Leading the way right now. One sector thats been a hot topic for many investors lately, is clearly housing. Before the foreclosure crisis, there were 16 million singlefamily rental homes in the united states. Most of them were owned by small investors, mom and pop types, who bought the homes for extra cash, and perhaps to pay for College Education some day. That is now changing fast, as big money investors take over in neighborhoods across the country. Cnbcs diana olick has the details from atlanta. Good morning. Good morning, simon. This is douglasville, a suburb of atlanta. Very nice. Youve got manicured lawns, a Homeowners Association here, good schools. Right next door is a governmentowned fha foreclosure. This house was a foreclosure, but it was bought by an investor. This guy, aaron etleheight, i interviewed him a few years ago when he was buying foreclosures out of his living room. Guess what, he now owns more than 2,000 homes. And hes turning his holdings into a Real Estate Investment trust. Just like apartment owners do. This is the new rental model. Three years ago, did you ever think you would be as large as you are today . I hoped for it. Its happened a lot faster than i thought it would. Now, edelheit employs 250 fulltime workers. Buy, rehab, market, rent and manage the homes. By buying the homes at a discount and using his own teams to rehab them, hes giving his investors not just cash flow, but hes bringing a distressed home back to its real value, a value that will likely grow. Its showed through dividend payments, through the price that were paying, through our property management, that we can do this. So i started communicating this to investors, this is a generational opportunity to really institutionalize a business thats been around for a very long time. Why turn this into a reit . Because you have to combine it all together to get economies to scale and size. Do you have visions of going public . Were evaluating all our options. Now, two singlefamily rental reits actually did go public last month. Silver bay and altasource residentials. Kbw just put out a report saying 6 billion to 9 billion has been raised or committed, and thats the potential for 40 to 90,000 properties, thats just 15 of the foreclosures out there. The bankowned homes. Theyre expecting, quote, robust growth over the next 12 to 24 months, potentially emerging as a new asset class. This is definitely one youre going to want to watch. How do you manage it all . Well, were going to have more of that coming up throughout the day. Back to you guys. Thank you so much, diana olick. We take a check on shares of herbalife. It was disclosed through a filing, 13g filing that dan loeb has taken an 8. 2 stake in the company. The shares spiked as high as 7 , now theyre trading higher by just a half a percent. Andrew pointed out when he first reported this news at the top of the hour, is that its a passive investment, not an activist investment. We should also point out that this stock has very high amount of Short Interest involved. 25 of shares outstanding are short, the stock has already made a tremendous turnaround since ackman disclosed 20 million shares stayed short. It is up 48 since hitting a twoyear low on december 24th. All right. Meantime, a new problem for boeings deemliner today. The third one in three days. This time it involves the brakes. An analyst said hes still bullish on the stocks and well explain why, when we come back. Its eight minutes to ten in chicago. Good morning, rick. Good morning, simon. Of course, theres been a lot of talk and thought about what happened on january 1st with regard to the house passing the senate bill. No amendments. And many of my sources i have questioned since then in d. C. All seem to lead me to one conclusion. There was an awful lot of arm twisting going on for the House Republicans not to add any amendments to the bill. Not to add any spending cuts to the bill. The reason put forth in the press, it would result in some economic turmoil. Whats that catchphrase mean . It would have riled up the stock market. Heres my contention. We cannot, meaning we as a country and congress in particular, should not, could not and should never again use the stock market as their main barometer against addressing whens wrong with the country. Ill give you the case in point example. And i was one of the first to bring it up. That unless the stock market started to throw a hissy fit like the t. A. R. P. Vote theres very little to get it to move through congress before the deadline and lets go back to the t. A. R. P. Deadline and put up a graphic of september of 08 for several months moving in to 09 to look at the pattern in the stock market. Now, lets go over it in detail. On friday, the 26th of september, 2008, the dow is at 11,143. On monday, 9 28 09, the big t. A. R. P. Deal did not pass. It was signed in to law march 3rd and dow at 10,325. But, but where did it proceed to go . It proceeded over the next several months to go down to 6,547 on march 9th. Okay . It wasnt until march 14 that we came up and saw the light of 10,000 again to the downside through the upside. The moral of the story an immed gratification, the investors know whats going on but that vote didnt fix what was wrong with the stock market and proceeded to continue to go down. The moral of the story is, do whats right for the country. Not whats right for some Immediate Gratification on stocks and take it back to one more thing. We have had many discussions about the course of the country. And everybody says, ah, look at stocks, doing so well. Heres what i would say. As i look at the country, its a lot like looking at yourself in the mirror. I dont look like i changed much but look at a picture of me 20 years ago. It took them over 20 years to catch madoffs ponzi scheme and takes us many, many years with printing presses, fasbi to recognize the deter yags thats being used by the programs. Get busy, congress. Litmus is the ultimate direction of the country, not the stock market. Back to you. Thank you, rick santelli. Facebook to unveil something new next week. Social network sent out this invitation to members of the media yesterday afternoon for an event at the headquarters in menlo park next tuesday and the only clue facebook is giving are the words come and see what were building. So that brings us to the squawk on the tweet. What could facebook possibly be building . Tweet us. Let us know. We have our responses next. Im only in my 60s. Ive got a nice long life ahead. Big plans. So when i found out medicare doesnt pay all my medical expenses, i got a Medicare Supplement insurance plan. [ male announcer ] if youre eligible for medicare, you may know it only covers about 80 of your part b medical expenses. The rest is up to you. Call and find out about an aarp Medicare Supplement insurance plan, insured by unitedhealthcare insurance company. Like all standardized Medicare Supplement plans, it could save you thousands in outofpocket costs. Call now to request your free decision guide. Ive been with my doctor for 12 years. Now i know ill be able to stick with him. Youll be able to visit any doctor or hospital that accepts medicare patients. Plus, there are no networks, and you never need a referral. 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If you have any sudden decrease or loss in hearing or vision, or if you have any allergic reactions such as rash, hives, swelling of the lips, tongue or throat, or difficulty breathing or swallowing, stop taking cialis and get medical help right away. Ask your doctor about cialis for daily use and a 30tablet free trial. It is not quite 38 and went public but for the First Time Since july 16th, facebook shares back above 30. They hit an intraday high of 30. 50. Hasnt closed above 30 since july 13th. Thats a nice gain here going in to the session. Meantime, time for squawk on the tweet. Facebook is to unveil something new to members of the media offering these words as a clue. Come and see what were building so this morning were asking, what could facebook possibly be building . A death star. Kram a rehab center for shareholders. He can probably staff a few. Probably extra rooms on that front. Yeah. Whats up tonight . Herbalife handbook. All to know to turn it in to tomorrows meeting and the former chairman of gold and the outlook for gold and tony telling us the breakup value of hewlettpacka hewlettpackard. How does he get there and the traders make of the prediction . All that top of 5 00. See you in 30 minutes, simon. Heres what you missed earlier on. Welcome to hour three of squawk on the street. Heres whats happening so far. If washington could just get out of the way, then 2013 could be a half decent year. The real answer is that there are too many people making too much stuff out there. Its the World Competitive environment is too intense. He has perhaps the best grip now of global finance, too, because that decision to go on morgans board, smarter than the average bull. I have never heard you so excited about alcoa. Great call. Yeah. I love the offensive. Activist investor now buying a more than 5 stake in herbalife. The third point manager is betting it will go up. Will become a company thats owned by the market. Not by partially by the government. And i think thats a good thing for employees, a good thing for our shareholders and i think its a good thing for the market more broadly. Someone with a little broader perspective i think would be good but he has a confidence of the president and i think really in terms of moving this nation forward, we need to get them in place and get on with the fiscal problems that we have that are substantial and a real threat to the country. Good wednesday morning. We have post 9 here at the new york stock exchange. Lets check the markets. The dows having not a bad session up 74 or so. S p adding about 5. 5. Nasdaq up 16. Herbalife sharing after third point disclosed that stake in the company. Stock then fell briefly negative and now back up about 3 . More than that when meherb greenberg joins us. Bernstein says they dont see a breakup of either company as imminent. Lets get to the road map. Seems to be a problem after another for boeing and the 787. Three separate planes experiencing different problems over the last few days and so far boeing is back in the green today. Well talk to them about why this could be a buying opportunity. Plus, aol Ceo Tim Armstrong with us live to tell us about the future of aol and turning the company around with the web. Spark capital has a knack for investing in some of the best startups around. They have invested and often years before others got the memo. Well talk to the founding manager live and how they do it. News starting today, danboebs taking a stake in the herbalife. Shorted more than 20 million shares calling it a pyramid scheme and suggesting it would go to zero. Nobody knows it better than herb greenberg. Gary kaminsky with us, as well. Took a wild turn about 60 minutes ago. This is sort of like a tugofwar stocks playing out live watching the charts and whats going on right now. Very interesting because the way i look at this is that youre seeing a number of Hedge Fund Managers for whatever reason line up against ackman and i believe you have people that dont like him and they want to take looking for an opportunity to go against him. You know, they know something regulatorywise will happen any time soon and you look at these and wonder, how long are they going to be there . How long is dan loeb going to be there and Genuine Research has he done . Well see what he says. Gary, what is your take so far . Carl, one of my goals in life to talk about herb with herb on tv. No. On a serious note, i walked in this morning and mentioned to herb i heard a number of private equity Hedge Fund Managers taken positions in the personal accounts, i want to emphasize, bought it personally because i dont know if its a personal thing against ackman but sort of rules of engagement of short selling may have been broken here in the sense that hes done it in the past and discloses short positions. Some say you dont do that. Let me finish. Herb, yes, einhorn has done that. And others. Why is it you can promote a long and cant promote a short . I wont give you that answer but you know as well as i do theres a Gentlemans Club out there if youre going to take a big short position Gentlemans Club . Its a fundamental short, you keep it quiet. I do believe, i wouldnt be surprised, lets say, if we saw another 13g file by another person other than dan loeb because i think a number of other people stacked up. Its fun to watch. Gary, dont you think watching the way it traded and peaked before it went up again at that point there may have been other short sellers coming in . Perhaps initiating their own positions at that point. Of course. You know how ackman thinks these things up and could be lining up a number of other short sellers and jump there and a number of funds fighting a number of funds. I do know a number of investors in their personal accounts, again, emphasize personal accounts, made a lot of money on the rebound up about 40 since the first initial decline. Yeah. Ten trading sessions, 56 gain. Herb, walk me through what you will say in the documentary in the next couple of days. Selling the american dream. Like giving birth to this thing. Coming out later on. Well let you know. Rolling it out. Ill be on shows with clips later. We found basically this is an Industry Based on our research that appears to be in need of some regulatory scrutiny. Now, what the regulators will come up with is anybodys guess. I believe when they go through this thing, they find this is an industry whose Business Model needs to be worked on and in that case, as ive said before, i think you can have a forprofit situation down the road with a hard reset to the model but between here and there it could be a year, two years. These things take time. Yep. That is still saying something given what they are doing, especially today. Thanks, guys. Talking to you later. Meantime, some more problems for boeing 787 dreamliner after a third incident announced today. Japan had to cancel a flight because of a reported brake problem but we have an analyst with an overweight rating on the stock. Carton copeland with a 95 target on boeing. Good morning. Good morning. Boeing doing fairly well today. Why . I mean, beginning to see some reports and yours included that these problems might have more to do with maintenance than construction. Whats your take . Yeah. Look, i think, carl, you have to put it in contest. Theres 57 out there and probably two flights a day. Thats 100 flights with 598 dispatch reliability rate, two wont go as scheduled on time and were really focused i guess in the media on why are those two planes not going. We have to Pay Attention to the fire at logan which was a unique incident. But i think were always going to have planes that dont go. Just as an example, the 737 has a 99. 8 dispatch reliability but since theres 5,000 of out there flying four flights a day, 40 of those dont go on thyme and not reading about them that dont go and the 787 is new with the focus. Still, people want to say because of the composites, trying to essentially in many ways reinvite the modern commercial jet. This isnt like another rollout and a new generation 777. Is that fair or not . Well, in fairness, i mean the technological leap on composites is not debated here. Were debating the real around the electrical system and whether theres a connection of events. Boeing insists theyre not. Theyve been able to pin some of the prior problems of people on a faulty batch of Circuit Boards and even then with them theyre manufactured at three or four levels of redundancy in the systems and they have worked as planned. Now, as i said, the fire at logan is a unique example and the ntsb is investigating but i think trying to connect this event to other events is pure speculation at this point. We dont have a lot of data. Have you seen any sign that production might be interrupted, slowed down if, in fact, they have to address the things along the production line . None whatsoever. Because as the journal points out today, you get paid upon delivery and worstcase scenario would begin to avoid cash flow if they were delayed. Yeah. Look, the central bull thesis for boeing shares is about the large amount of cash the company will generate over three or four rates and with the 787 ramping up to very high levels to meet customer demand. If we were to call in to question that cash flow, that weighs against the bull thesis. We dont have any data to suggest that will happen. The planes are still flying and i would say these sorts of teething problems are normal for new planes. We have them on the a380 and we have to wait and see and we need more data and not calling in to question the longterm fundamentals. If theres any other weight around the stocks ankles its been discussion about the labor discussion, the prospect of a work stoppage down the road. Likely or not . These things are always hard to call. Work stoppages at boeing are a big deal because they cost the company a lot of money and i dont think theyre in either sides best interest but this is a regular factor in boeing in terms of regular labor negotiations so this is not something new. We have seen strikes in the past. Not as much from this union as from the iam and has a contract as was negotiated december 2011 but i think, you know, i would put the risk of a strike as low but thats an ongoing risk. All right. Something we live with in general and talking about big machines. Thats right. Carter, thanks so much. Thank you. Tim armstrong will join us live in a moment from ces in las vegas about the future plans for the company and the new board position at priceline. Com coming up in ten minutes. First, santelli is working on something for later on in the hour, rick. Yeah. You know, i find it fascinating with a topic in the works for weeks and today theres an oped of Mitch Daniels moving to peru and making the salary commiserate with performance because what were going to talk about today with a doctor thats director for College Affordability and Productivity Center is exactly why so many president s are making so much, is it right, is there a reason this inflation hits . Come back and talk about it with me in 20 minutes. So we have ongoing webinars and interactive learning, plus, inbranch seminars at over 500 locations, where our dedicated support teams help you know more so your money can do more. [ rodger ] at scottrade, seven dollar trades are just the start. Our teams have the information you want when you need it. Its another reason more investors are saying. [ all ] im with scottrade. With multiple lacerations to the wing and a fractured beak. Surgery was successful, but he will be in a cast until it is fully healed, possibly several months. So, if the duck isnt able to work, how will he pay for his Living Expenses . Aflac. Like his rent and car payments . Aflac. What about gas and groceries . Aflac. Cell phone . Aflac, but i doubt hell be using his phone for quite a while cause like i said, he has a fractured beak. [ male announcer ] send the aflac duck a getwell card at getwellduck. Com. The market flash desk, take a look at shares of jc penney after a downgrade. Liz dunn basically says that the model is taking too long to work or longer than expected. Lower price target to 22 per share. Also lowering fiscal year 2013 eps. Carl, back to you. Thank you for that. Lets get a Capital Markets oped for this morning. Gary talking about ipos to watch next week, gary. Yeah. Carl, getting ready for this segment, why do people care about ipos . But they do. You know, in 25 years of investing, trying to reflect back last night, 2 times despite managing billions of dollars have an ipo performance affect the portfolio. Montgomery securities, royal vacuum, the maker of the dirt devil and mipps. But other than that, its very hard to get sizable transactions that make money. Take a look at this chart. Five below. I want to give a shoutout here. I didnt know what they did last year when i was learning it. In the summertime that this was going to be an ipo at all and up 100 from the pricing. Jess here, when i said anybody here know five below. Great company, great stock. Peter lynch school of investing. She called it. She said it. Heads up there. Why do i bring it up . Investing in ipos, making money in the names nobody knows. With that in mind, bring up a list of five ipos priced last week. Adam, thank you for the list. The ipos trying to come to market next week. You probably want to know you know the names and norwegian cruise lines and the one to focus im told by the syndicate people, they told you that five below was a name to own for the long term, suncoke energy. Take a look at this, the details. An mlp. Its been trading well, pricing well given what the needs for income investors, so if you have a relationship with bank of america, bar class, jp morgan, any Investment Bank out there, if you want to try to invest in an ipo, this is the one im told to focus on. Again, not the headline names or the facebook, the zyngas and things you never heard of. Good stuff. How did you do on the dirt devil . That dirt devil, 10 of the deal. Some things you never forgot. Montgomery securities, 10 and flew on the opening. I dont know what happened eventually but it was you know the red vacuums . Of course. Are you kidding me . The dirt devil. Classic. See ya. Thank you. Next, tim armstrong, the ceo of aol with us live and find out whats in store for the company this year and why his new seat at priceline is so important for aol. Were back after a break. E annou turn an entrepreneurs dream. Into a scooter that talks to the cloud . Or turn 30million artifacts. Into a hightech masterpiece . Whatever your business challenge, dell has the technology and services to help you solve it. Abecause what you dont know can babouhurt you. Ce. E, what if you didnt know that boxes by the curb. Make you a target for thieves . Or that dog bites account for a third of all home liability claims . What if you didnt know that one in seven drivers is uninsured . And that grease fires have to be smothered . The more you know, the better you can plan for whats ahead. Get smarter about your insurance. We are farmers bum pa dum, bum bum bum bum you have a comeback story. Shares of aol up 80 year over year. How can it keep the momentum going . Joining us from las vegas is Julia Boorstin with the chairman and ceo of aol, tim armstrong. Good morning. Thats right. Talking to us exclusively here at ecs. Thank you for having us. Youre a stock basically that doubled last year but the revenue in the first three quarters of the year declined. How will you turn around the business in 2013 . I think if you look at the revenue and the strategy, what you are seeing is strategys been consistent for three years in a row. We have gone from double digits down year over year and in a free fall to being q3 flat year over year and going to grow in 2013 so thats exciting for the shareholders and investors. We are launching gps for the soul. We gave chrysler Technology Care of the year with uconnect and gadgets officials media partner on the digital side for ecs and talking about the earnings and revenue, you are seeing that come out now and one investors are excited about aol stock. What will drive the growth in 2013 . A return in advertising dollars or a shift to the web . The strategy is precise. It comes down to four vertical things. Content, video, ads and commerce and each one we have very Clear Strategy and very simple strategy so i think when youre an investor and look at the company, the end of 2013, we hope advertising grows and we show profitability growth and want to see expansion of brands for a powerful brand company. This week youre added to pricelines board. What will you bring to the table . I havent been to a Board Meeting yet but priceline is a company ive been around for a decade or more. I think the ceo is one of the best on the planet and one of the best turnaround stories in the internet space. People ask me theres no great internet turnaround and looking at priceline, may be one of the best investments in the last decade and the expansion and exciting of priceline are the things im excited about. Does this mean more priceline ads on aols sites . My job is to be a board member and contribute at that level an we have a Great Partnership with priceline going back. Aol has had for the history so i theyll be partners in the future and excited about that opportunity. Everyone here is talking about facebook and twitter, growing usage, growing advertising. What kind of threat does that pose to aol and how will aols sites compete with facebook and twitter ads . So first of all, our content properties are actually in the growth segment right now and looking at the display number, classical aol business, its growing and we think content is the new social and once the connections are made on social, you add incremental more connections and what you really do is start to share massive amounts of content. We look at facebook as a great friend for our company but what we look at is the Consumer Usage in the internet space to rely on great pieces of content and brands and thats the strategy for three years. Carl . Tim, good to see you. Good morning. Thanks for being with us. A big business story of last year is maps and how theres been some new tumult between apple and google. You have map quest discover. I wonder if theres a way to get a piece of the action . Carl, first of all, thanks for having me on. Maps, number two provider of maps and i think we have the best free direction on map and mapquest is a story of another turnaround inside a turnaround and over time lost a lot of traffic and revenue and profits and we have been able to materially change that business in the right direction. I think what you are seeing is the world becomes more in closed networks and see the android, the ios and apple and become more closed, map quest is a brand across. We can drive Consumer Usage and revenue on the product and excited about the future of mapping and i agree. I think we have a huge potential wedge in the mapping space and working hard on it. You know, tim, we are talking so much about ads and your brands. But what can you tell investors about this legacy isp business and makes up a significant part of aols business . Yeah. So let me be really clear about this. This is a part of the story of aol. The legacy business, i dont look at it as a legacy business. We have dedicated brand users and improve and talk to those users again. Add more value to them and improve the search business over time and i think when you think about what has been impactful in the world in the last two decades, it is the internet and aol is the brand that brought it to people. The emotional connection with the brand is deep. I think we are going to take a legacy business and turned it from a negative in to a positive but its not the legacy part of it. Its the customer relationships that are important and talking to the customers all the time and we know what theyre thinking and doing so i would expect that part of aol, we have a bunch of things to come out this year around the aol properties and bullish across the rest of the brand portfolio. About advertising, a lot of questions of impact of Economic Uncertainty of ad buying. What is the outlook for ad buying in 2013 . I spend time with advertisers, even the last week, and a whole bunch of time in q4 and asking the average advertiser right now theyre saying advertising globally will be up which i take as a very positive sign and within that you have the tail wind of consumers going more digital, more ad dollars coming in and theyre a good place to capture that. I would say one message for washington would be make decisions more quickly because i think that one Carbon Monoxide effect of the fiscal cliff is when decisions dont get made, were working through it very well but i would just say, you know, washington can help the Business Company making faster, better decisions and help everybody out. Seems like a great note to end on. Thank you so much for joining us today. Back over to you. Great stuff. Thank you, guys. See you later. Dont miss the interview with julius generachowski today. Bells about to sound in europe in three minutes. Well get the closing impact details with the dow up almost 75 points. Impact life expectay in the u. S. , real estate in hong kong, and the optics industry in germany . At t. Rowe price, we understand the connections of a complex, global economy. Its just one reason over 75 of our mutual funds beat their 10year lipper average. T. Rowe price. Invest with confidence. Request a prospectus or summary prospectus with investment information, risks, fees and expenses to read and consider carefully before investing. We have a touch of negative data out of germany today. Investors reacting and the markets dont seem to mind. We have a Banking Sector surging. Second line banks surging again after the relaxation of the basil rules and have a look at the european markets. Closing now. Closed on the session in europe and substantially higher. Italy has done particularly well today because it has a lot of weaker banks doing well and the Telecom Stocks rallying today on the Financial Times report that, in fact, the big Major National players approached the commission about sharing their infrastructure across the eurozone or maybe consolidation and those are that are the weaker players at National Level in europe doing better today because potentially they would be the takeover targets. You could argue. Now, today and tomorrow new york time we learn whether the European Central bank cut rates or not. The information im getting is waiting until theres the crisis potentially later in the year. The bigger issue for this year is whether the European Central bank will have to come through on its promise and physically buy the debt of, say, italy and spain to support the markets and therefore i just want to take a moment to look at the major questions well be watching in 2013, those critical questions courtesy of sunny capor and central to that will be not just the italian election but the german election. Carl was mentioning germany is contracting we think at the moment. Angela merckel has to face the elect rat with euros that are propping up the whole system. So the german election, italian election absolutely key this year. As indeed this question of whether the social fabric will hold. As time goes on with pension cuts, with people running down savings amid mass austerity, spain or greece, what happens if a protester is accidentally shot . What will that do to whether they have to calm the environment . Thats what people are talking about on the periphery of europe at the moment and question of real money to return, real money. Longterm money will return back to the peripheral bond markets. Spain the going to try to raise 121 billion euros of debt this year. Who will buy it . At the real level. You can liberalize, for example, the greek taxi system. Who will set up a taxi firm in athens in the present system . Returning the big question of whether the nasties in the Banking System which still remain in europe could blow up massive parts of the system undercapitalized and sony kapoor believes that the Banking Union is a total farce because the ecb may be supervising but the safety net money only applied for losses in the future but not sitting on at the moment, carl. Tomorrow morning ecb. Well see. You see draghi got person of the year. He hold the markets together in 2012. There is absolutely no question about it. Buying a lot of time. Well see you later. Thanks. The Federal Reserve meantime says the magic number of u. S. Unemployment is 6. 5 and Steve Liesman says we may not get to it any time soon. Not that we had high hopes for this. Your kids, you could be a grandfather by then, carl. Oh bother. This is the new game in town. Trying to figure out how long can 6. 5 unemployment. Morgan stanley with a piece, i was working on numbers. First well go with Morgan Stanley. What they did is said given different Participation Rates, the percentage of the workforce available for work, how long if we grow 150,000 jobs a month will it take us to get to 6. 5 . Its a very long time. This is where we are right now. 63. 6 of the population available to work. It takes 6 1 2 years to get to 6. 5 unemployment. If the Participation Rate goes down, it would take less time and if it goes up, for example, say we got back to where we were a year ago, 64. 2, 16 years. Carl could indeed be a grandfather by then. Lets take a look at the work we did. A slightly different take on it. If fed is projecting gdp growth rates. What is it projecting with a given growth rate . What we found is over past five years when the fed sees gdp between 2. 25 and 3. 25, that should be sorry, 275, a 0. 2 decline in unemployment. Half a point decline. If you get near 4 growth, youll get a 1 percentage growth annual decline. Plug that in. We have 7. 8 unemployment now. If we go at this rate, its 5. 8 years. Ratchet up growth more, 2. 5 years. Doing this number here, around 4 growth, we would bring unemployment down in to the 6. 5 range in middle of 2014. That is its going to be dependent on growth. What does the Federal Reserve itself project for unemployment . You can see here its not until 2015 that the majority members of the Federal Reserve see us getting down in to the 6. 5 Unemployment Rate and beginning to raise Interest Rates and by the way, 13 of the 19 members of the fmoc, carl, see that first Interest Rate hike right now in 2015. Im just hoping judy is not listening to the report. Why . Thanks a lot. Okay. Steve liesman back at headquarters. Bob is here at post 9 watching whens moving here. Not bad session. 16 years. Kids would be 19. Would be grounded thats for sure. Grounded. Lets let carls eyes rolled around a little bit with that one. My vote for time person of the year last year was the central bankers of the world because the criteria is who influenced the world most for better or worse . I dont think it was president obama. I think it was the central bankers of the world. Simon talking about draghi getting nominations from reuters about that. I concur with that. Central bankers of the world in general were the person of the year last year. Lets talk a little bit about the markets. Moving up to close to new highs on many of the major indices once again strong advance decline line and a number of many sectors with multiple stocks hitting new highs. Remember something. I say the risk to the downside now in the next couple of weeks. We are near fiveyear high in s p. A few points. Lets not quibble. The mid cap index. The russell 2000. Lets not quibble at one point short of it. Transports at a oneyear high. A lot of stuff is very high. Lets show you some things, a company at new highs. All the home builders. Supply guys. This group has been on fire for a while. No signs of dropping off at all. Let me just show you ancillary knockon affects of the alcoa announcement. Not a bellwether stock and made comments on china. Comments about particular growth in the business in china in 2013. And automotive, heavy trucks, double digit gains they have predicted. This is right across the board. Very positive. We are seeing knockon affects of what i call multiindustry stocks, companies that sell across many countries and many different kinds of businesses. Nice moves up today. This would have an influence on rockwell, emerson, 3m. Largely on the strength of what alcoa had to say about china. Finally questions about solar stocks again. Very strange stocks. Trade around a lot of weird issues and volume since the beginning of the year and why its happened i believe is the fiscal cliff built with provisions in it with tax breaks for wind plants and i think a lot of traders are now anticipating the fact, carl, that green energy isnt going to see any Big Government tax subsidy cuts throughout the following year. Thats the only reason to think of why were seeing the unusual volume in a few days in the stocks. No direct news but i think extrapolation going on. Usually one of the players but not several players in the sector move. Its a strange industry. It can get really tough moves on it. Ugly brutal year for them last year. Thanks, bob. Thanks. Rick santelli in chicago, a look at spending in the academic realm. I know what you mean, rick. Oh yeah. I tell you what. I have kids going to college. I understand this dynamic. Today in wall street journal a reform boilermaker. Pull out a quote. This about the notion that exgovernor Mitch Daniels running purdue. Over the last 11 years number of purdue administrators jumped by 62 and professors increased by merely 8 . Travel, tens of thousands of month of parties and gatherings, mansions, president of universities, like ohio states e. Gordon ghee. I think every Corporate Executive that does the right work should have all of those things. And it is really about endowments paying the bills or fund raising for the university . I brought in an expert. Dr. Richard vetter, welcome. You heard what i said. Is this all explained away by endowments and fund raising . No. It isnt all explained away. All thoel they play a role. Third parties are dropping money out of airplanes over College Campuses. The College Campuses take the money and more or less do what they want subject to some broad constraints. Thats different than the private sector. So, i do think that this is the dynamic at work here. The third parties are often Student Loans. To students who then which enables universities to raise their tuition fees, more so that you have to pay more to send your kids to college. Thats the dynamics sometimes indirect but the money is coming from third parties. And theres not a heck of a lot of accountability out there. Theres no bottom line in higher ed to speak of. So you cant say whether a president is doing good or bad. Although i must say i applaud Mitch Daniels for and the board of purdue the contract they deviced for him. Doctor, lets go to solutions. I always try to ink in to the solution realm. Is there any way to fix this . Obviously, whether you look at health care or College Education, the costs are definitely outpacing inflation. Whats worse is the government has a huge presence in both and makes reform almost impossible. How can we reform this so kids go to school more cheaply without the Student Loans . Well, youre right. The big problem are the government involvement and in some cases private fill an tl tlopic involvement makes it difficult to control the system. We have to have new measures of outcomes of students to see if the consumers are getting good value of the bucks to send their kids to school and outcome measures, the schools loathe to allow them to be transparent and available to the public. We need to have better information for the public. We have to have more innovation and Higher Education but the big problems invecentives. Theres no incentive. Why should we . We have to stop. Were out of time here. Lets Pay Attention to how Mitch Daniels does. Maybe this can be the first step in a long many miles to reform some of these outrageous tuitions and what drives them. Thank you for being our guest. Carl, back to you. Rick, thank you so much for that. When we come back, former u. S. Treasury auto adviser steven ratter in is here to talk about gm and the debt ceiling debate and more. Well find out how going to be huge successes and before no one else did. Coming right back. [ indistinct shouting ] [ male announcer ] time and sales data. Splitsecond stats. [ indistinct shouting ] its so close to the options floor. [ indistinct shouting, bell dinging ]. Youll bust your brain box. All on thinkorswim from td ameritrade. [ male announcer ] dont just reject convention. Drown it out. Introducing the allnew 2013 lexus ls f sport. An entirely new pursuit. With the spark cash card from capital one, olaf gets great rewards for his Small Business pizza [ garth ] olafs Small Business earns 2 cash back on every purchase, every day helium delivery. Put it on my spark card [ pop ] [ garth ] why settle for less . Great businesses deserve great rewards awesome [ male announcer ] the spark Business Card from capital one. Choose unlimited rewards with 2 cash back or double miles on every purchase, every day whats in your wallet . What are you doing . Nothing. Are you stealing our Daughters School supplies and taking them to work . No, i was just looking for my stapler and my. This thing. I save money by using fedex ground and buy my own supplies. Thats a great idea. Im going to go. We got clients in today. [ male announcer ] save on ground shipping at fedex office. Coming up, facebook is a sixmonth high. What does the company have up its sleep f sleeve. Lowcost iphone, risks and rewards. And loeb versus ackman. Class of the titans over herbalife. See you in 15. Juicy story. We thought martial arts was exciting. Ceo of General Motors speaking out. Heres what he told phil lebeau in the last hour . 70 of the products in this country, various brands and models, refreshled or brand new, so we had to kind of take a deep breath at bankruptcy, generate cash, we have done that and reasonably quote unquote old portfolio, we are going to come in to some good days. I want to get reaction this morning from steven rattner. Steven, good morning. Good to have you back. Good morning. What do you make of this . Fresh start for the company or not . Dan laid out about the facts as they are. Because of 08, they could not keep the Product Pipeline as filled as any of us would have liked. Now the time has passed. They have refilled the pipeline as he said. The products are coming out. And what he didnt quite say and what the issue is are they going to sell . We find out over the next six months to a year whether the new trucks and cars really do really do become Game Changers for the company and this is a critical moment. Not the companys not going to go bankrupt again. It is in great shape. Dans done a great job. The question of moving forward with new products is one of the couple big challenges they still face. Yeah. And ackerson hesitant to go out on a limb with promises, though. 2015, they want to double profits, be breakeven in europe, the margins as good as competitors. Is that asking too much for a company thats facing uncertainty . Those are the right objectives. They need the margins in north america to be equal to fords. Theyre not quite there. Im a big dan ackerson fan but he would be the first to say its a long, long slog and europe has to get to break even. So i think just to pick out the two examples, i think they have exactly the right objectives and they need to get there and and possible but not a slam dunk. Seems like Investment Grade might be a little more of a certainty. Would you agree with that . Yes. I think Investment Grade, theyre on a path to Investment Grade and great. Its nice to have but its not as important as getting products that sell, getting the margins where they need to be and getting europe where it needs to be and the three critical challenges in front of the country. Gm to treasury. You have heard the news to hear the nomination of jack lue tomorrow. The immediate response, steven, appears to be he is a hyper partisan, not as centrist a nomination as the president could have done otherwise. Is that fair . I know there is that feeling among republicans on the hill, that jack taken some pretty strong positions in the various rounds of budget negotiations. But what we need now is a really experienced government high level Government Official who knows the issues, who knows the process. Who can hopefully get something done in the next round of fiscal cliff type of negotiations and i think jack is very, very well qualified to do that. Does it temper your certainty he would get confirmed . No. I think he certainly will get confirmed. I think the republicans have bitten off a lot in terms of people to object to. No one can question this guys integrity, his experience, qualifications for the job. I dont think many even republicans believe that its their job to decide whether his views are exactly what they want them to be or not. Yeah. I dont know if you have a television where you are but have you seen his signature . Which is now gone viral on twitter. Here it is. Yeah. Im aware of this issue. Im told that tim geithner cleaned up the signature becoming treasury secretary. I have to say in all the issues of the country faces, what the signature of the next frsh ri secretary looks like is not one that keeps me awake at night. No, no. Although easy to understand and why its so viral this morning. It is amusing. Thanks a lot. Thank you, carl. They invested in tumblr in 2007, twitter in 08 and twitters new photo filter, Spark Capital invested in that company more than three years ago so how does spark know which startups are the winner . Well talk to the founder and managing partner live after the break. [ male announcer ] how do you make 70,000 trades a second. Reach one customer at a time . Or help doctors turn billions of bytes of shared information. Into a fifth anniversary of remission . Whatever your business challenge, dell has the technology and services to help you solve it. As initial investors of hot startups seeks that Spark Capital has a knack for predicting the next big thing but after a rocky facebook ipo should you shift from social to somewhere else . Todd dagres joins us here on the floor. Todd, welcome, good to see you. Thank you. Good to be here. Anybody listening to the list of companies, first question is, how do you notice them early on . Theres a screen . What sets your radar off . Well, we had a ready mind for social networking because starting spark seven years ago, we had a notion that technology, particularly the web, was going to go to the Media Industry and we were looking at things of user generated content, self publishing and led us to tumblr initially and then subsequently led to twitter because we saw the potential for a widespread platform, engaging with lots of people and being just a very broad and effective platform for distinting user generated content. At the time mobile was not a certainty and certainly we didnt know happening as fast as it is. Did you have that feeling or more of a lucky bet . Mobile was another one of the themes because we could see its coming. Twitter started off as mobile. It was a messaging group for groups. What do you do when they become phenomenal . How quickly do you look to exit . Patience to keep them private in the longer term growing, increasing, staying pat . Well, you always have your eyes and ears open but right now we are delighted with being a major twitter shareholder, twitter is on pace to do something in the next couple of years. We are not in a rush. It is like a tree that keeps rushing and more valuable it is. Does the theme stay the same or do you see your radar pivoting in any direction . We are heavily invested in social and not looking for facebook or twitter but other opportunities within the kind of greater web space. Like what . You know, the web is going to go to financial services. Look around here and see indications. Education, health care. Just one example is today people know more about their cars than they do their bodies which is kind of shocking. You get in the car and get the data and information and time to go to the shop. You have no idea when your body needs to go in to the shop. You wait until you get sick. Quantified self and monitoring and analyzing themselves is going to be a huge trend. Do you does the notion of hardware interest you much at all . We hear about wearable computers. Goog wl the glasses. Hardware is the word hard. Hardware is tough. Its capital intensive and you have inventory issues. We love software and virtual businesses and marketplaces. We love it when you can go like this and fix a bug and look at hardware and software is where the action is. You have a favorite child of them all in. I love them all. Love them all. You know, i think, you know, you cant cannot not like twitter. Tumblr looks fantastic. We have a company on the west coast to change the way video is advertised on the web. Those are some of the older kids who were fond of. Yeah. Please come back. Why. As the story evolves. Go pats. Yeah. Good to see you. Thanks so much. Tweet time by the way. Facebook is inviting members of the media to an event in the headquarters on tuesday. What could they possibly be up to . Tweet us. Well get your responses. [ male announcer ] staples is the numberone Office Superstore ink retailer in america. Now get 6 back in staples rewards for every ink cartridge you recycle when you spend 50 on hp ink. Staples. That was easy. Whei had[ designer ]eelingnk. Enough of just covering up my moderate to severe plaque psoriasis. I decided enough is enough. [ spa lady ] i started enbrel. Its clinically proven to provide clearer skin. [ rv guy ] enbrel may not work for everyone and may not clear you completely, but for many, it gets skin clearer fast, within 2 months, and keeps it clearer through 6 months. [ male announcer ] enbrel may lower your ability to fight infections. Serious, sometimes fatal events, including infections, tuberculosis, lymphoma, other cancers, nervous system and blood disorders, and allergic reactions have occurred. 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