Transcripts For CNBC Squawk On The Street 20130204

Siemens. Answers. Welcome back to squawk. We want to thank or guest hosts for being here on this postsuper bowl wrapup day. Steve liesman, well see you tomorrow. Join us tomorrow. Squawk on the street starts right now. Good morning. Welcome to squawk on the street. Im carl quintanilla, with melissa lee, jim cramer. David faber is off. Signs of reemerging political turmoil, both in spain, and in italy making investors a little bit reluctant to press the button for the upside. It comes after the dow did top 14,000 on friday for the first time in more than five years. Look at europe, thats where the storys going to be for most of the morning before we close at 11 30 eastern time. Germany taking it down 1,100 points as well. Asia got action as well as china. Nonmanufacturing came in better than expected. Clearly the story is going to be in europe for most of the morning. Weve certainly seen a flight to safety take place this morning, as weve seen the bond yields, particularly the spanish 10year bond yields blowing out overnight. Were seeing bids higher today. German bonds also higher. The 10year yield in the united states, back below 2 at this point. Were nowhere near the yields that we saw at the end of 2011, of course. And that we dealt with so often in the Second Quarter of last year, in terms of the crisis atmosphere that engulfed up. And in europe, and in this market. Still far from that, but interesting that we are revisiting europe in a way perhaps that people had become almost inured, but expecting we would not be. If youre looking for details on what exactly is going on, simon hobbs here a bit early here atost 9. Good morning to you, carl. David makes an important point. We rallied on risk assets in europe and were wobbling at the top of ha rally. Last week we were concerned about the economics in europe. Now it is all about the politics. Political risk over the weekend, the Prime Minister of spain had to come through defending his entire ruling party amid allegations that for many years, they have taken cash that was essentially funded by the big construction companies. He says he will be totally transparent, but there is a risk that you could get a snap election in spain and that, therefore, you have a hung parliament. It is the Political Risk that drives the markets. Now the spanish stock market is in negative territory for the year overall. Bear in mind where weve come, youre booking profits on a relatively strong rally. So the yields come up, but from a much lower base than we had at the height of the crisis. Lets check the 10year yields in spain. Theyre beginning to spike, but youre still down at quite low levels. Over in italy, berlusconi, now in opposition, of course, that he might offer cash rebates to people if the opposition were to win. Mario monti pictured there, we believe the left will come through in three weeks time and well maintain stability in italy, which is what you want in an international investor. But still you can see the exactly the same as spain, in which the italian stock market is coming off in february, and also again from a low base, those yields are beginning to spike in italy as well. You know, coming into the weekend, people at Morgan Stanley, Companies Like Morgan Stanley said were beginning to get worried about yields now that its front and center. Guys, back to you. Thank you very much, simon hobbs. Lets see how this is all going to impact the u. S. Session here. We have the head of u. S. Equity and quantitative strategy with bank of america, merrill lynch. Nice to see you. Nice to see you, too. Thank you for having me on. Weve been able to put europe on the back burner, but right now it might bring back bad memory for investors that this is exactly what derailed us a year ago. Its eerily similar. You know, i think, though, that the big surprise for the u. S. Equity market is that we might not see a pullback. I feel like everyones expecting one. And we might not actually see one. For a bunch of reasons. I mean, last year, i think one thing that was a little bit different was that sentiment was not as negative as it was at this point, where we are today. If you look at wall street strategists, equity allocation is still sub 50 . Youve still got a lot of strategists with price targets below where the market is today. I feel like a lot of investors have regarded this rally that weve seen so far as, you know, too far, too fast. Yet it might not be. I think we could actually go higher from here. Im just curious, when you say you dont think theres going to be a pullback, can you characterize what a pullback might be in your view . Yes. I think the sort of the standard 5 pullback, they happen pretty frequently. But i think that the consensus is weve seen one of the strongest januarys weve seen in a long time. Stocks have outperformed bonds pretty aggressively. So at this point, its more likely to see down side than up side. I think the market could just grind higher from here. Earnings have been pretty solid so far this quarter. Probably whats more important is all of the forward looking commentary you hear from companies is actually pretty positive for 2013. My favorite data point is if you look at Companies Outlook on capital spend, which we havent really seen much of, this year, so far in january, for every company thats guiding down on cap x, two or three are guiding up. I think were starting to see companies actually spend, or signal that theyre going to spend some of this capital that theyve been sitting on, which could actually spur Economic Growth and get us to a better place. So weve gotten to this point in this particular rally, where we have matched almost 14,000 for the dow from five years ago. Do we grind higher in your view and get out of the sectors that have led us higher, transports, mid caps, small caps that havent seen the rally Like Technology up only about 2 this year . No, i think that we see a rotation. I mean, my favorite area to be right now is stocks that have gdp sensitivity, and that are globally diversified. Because i think these stocks have gotten beaten down over the last couple of years. This is tech, this is energy, this is big cap, industrials, these are stocks that have basically been that have gotten cheaper over the last couple of years, around fears of a global recession, around fears that the rest of the world isnt as strong as the u. S. Today, i think that its time to really reverse that trade and go back into some of the more globally geared gdp sensitive stocks that are cheap, theyre underowned, and it looks like the Global Economy could actually outpace the u. S. This year, and for the next couple of years. Savita we talked to a bunch of strategists this year who are, i would say, aggressive to i mean, mixed in terms of their defensive nature regarding sector allocation, that they might step on the accelerator later on in the year once we get past some of the d. C. Deadlines and go more cyclical, go more economically sensitive. Would your advice be to err on the side of aggressive . I think its theres no better time to do it than now. The reason is that, you know, i think the market looks through a lot of these events. What im focusing on is growth for the second half. And like i said, cap x, i think thats a strong theme. Were starting to see companies signal theyre going to spend some capital. That translates into growth in the second half. Why not buy these stocks while theyre still cheap instead of waiting until they run up a little bit. Thats my accepsense. I think the shortterm move, its a risky strategy, because the market could get ahead of you in that time that you wait. Right. How about if youre looking for signs that this is all for real. Should we expect the normal correlation between what equities are doing and what, say, the 10years doing . I think a lot of the correlations have broken down a bit. You know, one thing i would look for, to see this is a real, you know, kind of a sustainable economic recovery, is a couple of things. I would look at guidance trends. I would look where management is guiding relative to expectations. Guidance so far has been pretty positive. And i would look at earnings. Whats remarkable to me is that were calling for 1600 for year end, which is a new high for the s p 500. And everyone thinks that were just these raging bulls because were calling for a new high for the market. But if you think about it, earnings have continued to make new highs every year, since 2010. So i think that until we see a real degradation in earnings, that would cause some alarm to me. But so far, weve just seen earnings consistently grow. Granted, were not calling for a huge market expansion. By i think the top line has come in healthier than a lot of investors and a lot of Market Participants were expecting. If that continues, i think that this is a sign that what were seeing is actually real and not just smoke and mirrors. Savita, well leave it there. Thank you for joining us this morning. Thanks so much. Moving on to another big story this morning. This years super bowl will be remembered as much for a mid game blackout as the ending. Power went out for 34 minutes in the Third Quarter. It was blamed on an abnormality in the power system. Ravens beat the 49ers 3431. Brian shactman back at hq with a game that will be interesting to see what its remembered for four years from now. What is also fascinating, carl, i really want to see the tv ratings, because when jacoby jones ran back the opening kickoff in the second half, a lot of people probably changed the channel. Made the score 286. And the game seemed over. But then as carl pointed out, the lights went out, literally, and the game paused for a half an hour. A lot of people want to talk about whose fault it is. The areas utility said power supply never stopped into the superdome. They cited an abnormality in the system, maybe a power surge that triggered a circuit breaker, generators actually kicked in. It took some time to get everything restarted. It had a definite impact on the resumed. It the 49ers came all the way back to within two points. Check back on tv, and you caught a classic. Thats what i want to see as people returned to the game, they had four chances inside the 10 yard line, but they could not get it done in the end. A lot to fodder on this game. I do want to point out, if baltimore didnt hold on to win, the conversations would have been a lot different, carl, and guys, on the blackout. Because it would have been a heck of a lot more controversial if San Francisco had come back and won. I wonder what the recourse would have been. Were going to talk about the ads, of course, brian, later on. I mean, mike this morning said they were weak. He said, the ads were kind of weak. I wonder if the view is widespread. I think it is. I always go back to, you know, your terry tate office linebacker, the first time you saw the etrade baby. Now that youve seen it a million times, you dont have the impact. But take yourself back to that moment. We talked with tivo people earlier. People talk about the funny ones. I think the better ads were more poignant, theyre less talked about in the way that the funny ones are. Like the jeep or clydesdale horse which are sentimental, maybe they dont get the same kind of buzz. I dont know, my vote was for the Deion Sanders sand castle. That had 9,000 twitter followers. Like ten minutes after his fake one. I cant get to 4,000 in a year and a half. Whats also amazing, guys, is that for years, there was basically one metric in terms of rating these ads. Now facebook has one, twitter has one. Its hard to say who is truly number one, if there is such a thing, you know what i mean . To see the immediate polls happening online in realtime was pretty amazing. Twitter buzz also. I was not on twitter for most of the game until the blackout when i realized i had to go on to find out what the back story was, if there was one to be known. There wasnt a lot of reporting around to sort of really understand what was going on, or how long it would. We still dont seem to really know exactly what happened with the power surge. A lot of these ads get shared ahead of time as well, which may dull the impact. I tend to agree, there were more serious as that farmer ad. Paul harvey, beautiful. Cramer was there, lights go out. Coincidence . Were still trying to figure that out. But hopefully well get jims report in person when hes back here on post 9. Quickly, guys, the biggest winner on the field, i want to point out for joe flacco for a player, he makes 7 million this year and going to be a free agent. He would have gotten a Franchise Package at maybe 14 million. Now they think hell get a drew brees contract like 100 million, five years. He made out the best on the field. Unbelievable. Great night on television, ill tell you that. Talk to you a little bit later on. Brian shactman. Why apple has not been participating in the recent rally. Also ahead, the ceo of dominos breaks down the super bowl sales and well find out how the blackout affects some of that realtime business that goes on. One more look at futures. Decidedly weak on political concerns out of europe. A lot more squawk on the street live from post 9 when we return. Its not what you think. Its a phoenix with 4 wheels. Its a hawk with night vision goggles. Its marching to the beat of a different drum. And where beauty meets brains. Its big ideas with smaller footprints. And knowing theres always more in the world to see. Its the allnew lincoln mkz. announcer at scottrade, our cexactly how they want. T with scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. On the first day of trading under the new nim and symbol, blackberry is trading sharply higher. Outperformed Market Performance bernstein. He said the company has more confidence in the blackberry 10 but still notes its skeptical of the sustainable comeback at this point. The new ticker will take some getting used to typing this thing in, bbry, versus rimm. Certainly it had the ad in the super bowl after the big launch. But still, the z10, q10 wont hit the market for another few weeks. A lot of the cell guys doing their channel checks. Sometimes to write it. It is a data point. Saying that the response in the United Arab Emirates is good, and the uk, and canada. Well have to wait and see how it actually comes to pass. Interesting, we dont think these guys are going to make some enormous comeback. But the optionality value on an acquisition, on a niche placement in the market improves, as if the launch is strong. The important thing is, it doesnt have to be a samsung or apple. It doesnt have to be anybody. It just needs to maintain its base. If it can get its base to upgrade to the new devices, that is half the battle for this company. It is the first trading day after the dow closed above 14,000. The one and only art cash will join us at post 9, thats next. Look at futures one more time before the open. We are looking to lose about 83 on the dow right at the open, about 8 1 2 on the s p 500. Much more squawk on the street straight ahead. At optionsxpress were all about options trading. We create easytouse, powerful Trading Tools for all. Look at these streaming charts theyre totally customizable and they let you visualize what might happen next. Thats genius we knew you needed a platform that could really help you elevate your trading. So we built it. Chances of making this . Its a lot easier to find out if a trade is potentially profitable. 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Art cash with usb joins us at post 9, talking about the futures we just saw, and the test thats setting up to see how sensitive we are to more euro drama. Yeah, well, i think it also tells us about a great deal of the influence of the currency in here. You came through a weekend, you just reached 14,000, there was a lot of conversation about it. If you were going to begin to stampede, sideline money, i would think today, tomorrow, or the next day is when you would see it. Instead, with no major change in economic numbers, the euro pulled back. When the euro pulled back, the futures pulled back, too. We may be back in that period that we saw several times last year where they gave that dreadful name risk on to. And if the euro went up, certainly stocks went up, and many other assets with them. At the same time, art, correlations across the market were much lower than a year ago. Do we still have the risk on, risk off . Is this just an excuse for the markets to take a breather . I think youre right about the separation and correlations, but i dont think weve seen that separation with equities. Certainly not u. S. Equities. And its staying there. The other thing that should have helped us along, whichever team won yesterday, the super bowl indicator was going to say was all right. As an oldtimer, it was nice to see meredith show up and put out the lights and the partys over and they decided to do that. Everything but the lipton tea was there last night. Thats right. To what degree do you think protectionism from a pullback, or severe pullback is in place . Well, i would be surprised to see a big pullback immediately. There are so many people who are on the sidelines vowing if it pulls back 2 , im going to be there. If it pulls back 3 , im going to be there. Either they all turned chicken and panicked, something comes up and theyre saying, oh, wait a minute, im not going to be there for that, its almost selffulfilling that the market wont give you that dip. When you look at the volatility index, below 13, weve been at the very, very low levels, do you look at that as danger for the markets in terms of the inverse relationship that we typically see, or do you think thats a way for investors to stay long the market knowing they can buy to protection . I dont see that as concerning as all of the indicators about Money Managers sentiment and attitude, which turned very, very bullish, near historic levels in some cases, and the other thing is, at least the figures i looked at, insiders are starting to sell in accelerated form. So youve got what looks like informed money saying, i want to be a little cautious here, and the emotional money saying, gee, i better dive in. These political allegations in spain. I mean, are they likely to go away soon . Berlusconi is going to be running for a while in italy as well. Its not like this story is going to fade into the back pages tomorrow. No, i think toward the end of last year, people said, wow, theres a rationality as we discussed, and theyll have people understand for the sake of europe and their own particular nation, they better behave. All of that is beginning to disappe disappear. Were going right back into where we were. Berlusconi is making some very attractive deals, you know, if youre a voter who said can i be bought off. There may be headed back to where we were. The spanish allegations, there are strong calls for a possible resignation. It could be troublesome. Draghi answering the populous stance, thats pretty much out of his hands. Absolutely. Hes there with the intervenous, promising, if its needed. And thats been enough to calm markets over the last several months. But if it begins to move back into the streets, thats not, as you say, he has any authority. Quickly, art, what do we need to hold today . I would think here you would want to watch to see if they pull back through 1,500 in the s p. When you broke out, i think i said on this program, the count was a target of 1515. We got there. Now were headed back the other way probably. Art, thanks a lot. Busy week setting up. Weve got the latest details on dells quest to go private. The opening bell just a few moments away. A lot more squawk on the street when we come pack. [ male announcer ] at his current pace, bob will retire when hes 153, which would be fine if bob were a vampire. But hes not. Hes an architect with two kids and a mortgage. Luckily, he found someone who gave him a fresh perspective on his portfolio. And with some planning and effort, hopefully bob can retire at a more appropriate age. Its not rocket science. Its just common sense. From td ameritrade. The dow gind 113 points, crossed over 14,000 for the first time in five years. Well see where this week takes us. The opening bell about to ring in a minutes time. Well get factory orders and mortgage apps, but the story so far this morning is turning out to be europe. Well see, david, to what degree it turns out to be herbalife. They went back into the freedom of information request and saw a number of complaints. That story still fascinating. But more fascinating to me in terms of the battle between dan loeb and bill ackman, perhaps icahn and ackman, they battle. And ackmans investors. I still continue to wonder whether having watched that on television, watched what hes done here, whether there perhaps is newfound reluctance on their part and what it could mean for any liquidity issues that they might face. Herbalife fundamentals continue to battle, and this other battle, as if not more interesting. To put this year in super speck tiff. The dow has gained more points this year than it did all of last year. 905 points so far this year. 886 last year. Here at the big bort, ellie mae for the mortgage industry, and the nasdaq, grace maine representing queens, new york. All right. Yes. Says the boy from queens. Walmart downgraded from jpmorgan today to neutral. Talking about how some of the lowhanging fruit has already been picked. Because theyre so big, they advise going to more aggressive on a target. Hard to make a lot more progress. They make the point that we made many times, walmart had a great year last year in terms of its stock. You just said it, low hanging fruit. Well see how that stock reacts. It is down about 1. 5 right now. Overall financials are weak in todays session. Morgan stanley down by 2. 75 . Declines on the part of bank of america and citi, down more than 1 apiece. Technology, it follows the theme all throughout 2013 so far, technology is slightly lower. Although we do have apple trading higher today. The fact that apple of late seems to be bucking the trend of the markets. Whenever that trend happens to be. Today is a downtrend, apple trading higher. Certainly for the year, it has been that the markets rallied without apple. In spite of apple we should note. It is still the Second Largest Company by market capitalization on the s p. Theyre very close, exxon and apple. And we have to mention facebook. I mention facebook because the shares are down over 3 . Adding to losses that have started to add up percentagewise for this company, after reported what were not great earnings. At least when you look at mobile and the growth there. Again, that according to some who follow the company closely, who were not as perhaps enthused as they otherwise might have been. Within the realm of this sort of large cap, technology leaders, google getting a downgrade today. Google trading down by about a percent. The price target still at 7. 90. The real thrust of the downgrade it seems is valuation. Google shares hitting a fresh 52week high, up 39 since june 14th. That compares to the s p of just 14 . Outperformer there. Sentiment vastly improved on the name. Investors climbing the wall of worry when it comes to costs per click. They want to see some fruit, that the business is gaining some traction. Particularly when it comes to youtube monetization and possibly a return of capital to investors, which they say is unlikely. Obviously that would get them more constructive on the shares. Google, down. 75 at this time. Oracle buying acme packet. Despite all the jokes about wile e. Coyote. What happens next with network gear. As oracle makes this move. People saying whos next. Is it a riverbed, is it something else. But they do this, its like popcorn for these guys. It is popcorn for theyre an acquisition machine. One of the senior members of that management team, another deal, 22 premium, all cash. Not many deals on this monday morning, to speak about. Similar to what we saw last monday despite what seemed to be hopes that there will be a reemergence of merger and acquisition market. So far not the case. It is very early still. Riverbed is up by 1. 7 . Speaking of other names, sort of in this space. That might be viewed as potential next takeover candidates out there. Boeing, another story on boeing today. Japan airlines wants to talk about compensation for the 787 troubles. Theyve operated a few, i believe seven 787 dreamliners. Which they had to ground. Theyre saying it could cost nearly 8 million when it comes to earnings. So it wants to talk to boeing about compensation. Of course, this opens up the whole sort of question as to what boeing might be on the hook for. Certainly that was expected. But these air carriers will ask for some sort of compensation. The extent of that is unknown, as the grounding continues and the investigation goes on. Earnings season overall wipeding down. Were going to get yum tonight. I think there is a report in which they say they have a bad feeling, their words, about this quarter. A lot of concerns about hormones in products, the china market. Stocks down 12 from the highs set back in november. Well get one last round here. It is winding down. But there are quite a few notables. Yum will be one of them. Particularly when it comes as to how its viewed in the china play. In general, on top of the hormone concerns that are out there. Where do we pivot after earnings season as we get to the end here . Do investors start to look yet again to where we are in terms of fiscal matters . I would have to believe thats, in having conversations, thats where were going to. Sequestration. Correct. Right. Didnt want to mention dell. Before we get to bob pisani, dell shares down almost 1 this morning. May have seen a number of reports. Not much for me to add other than what i told you on friday which is the two sides continue to negotiate, continue to close in on a deal that my sources tell me will be announced, or is expected to be announce bd early this week. We said that on friday. Early is not just monday, it doesnt count as tuesday, maybe a little bit of wednesday. Well see. Its a complex deal, with a lot of moving parts, including microsofts investment, of course. But again, price talk continues to be what i told you weeks ago, 1350 to 14 is where i continue to be guided. Well see where they end up. Should be a lot of choreography if we get the deal. Nothing new to update from friday. People watch on that. Lets check in with bob pisani on the floor this morning. Good morning, of course. You see were down almost 100 points on the dow. Euro moving notably this morning. Its been rallying, moving down today. Concerns about spanish corruption charges. Now, these were floating around last week. But there are charges in the spanish papers that elements, including people in the current government, might have been accepting bribery charges. Its nothing thats been proved here, nothing that i can see thats been proved. Theyve been floating around for a while now. Now they seem to be on everybodys mind. If you look at some of the spanish papers that are printed in english, it seems like the corruption issue is now more important or bigger talking point than the focus on getting the economy going. And specifically, on dealing with some of the issues around improving the company overall. And structural reforms. This is a major problem, because remember, the spanish stock market and europe has been improving solely on the idea that theyre working on structural reforms. The yields have been moving down. If that stops and everybody focuses on corruption, thats a major problem. And weve seen the markets here. The markets short term, i think everyone would agree, you dont have to be a technician, is overbought. This might be the excuse were seeing today to see the market move down. By the way, if youre really worried about corruption, have you seen whats going on in soccer matches in europe . Theyre investigating huge numbers of soccer matches, including qualifying matches for the world cup, that might have been under the influence of bribes by players, and officials in the game. Look at that kind of corruption. Theres very good evidence thats going on. As for the great rotation out of bonds into stocks here in the u. S. , first month is in. The evidence is mixed. Theres no clear indication of whats going on. Weve got minor inflows into stock bond funds, not enough to deal with the huge outflows weve seen in the last four years. Theres been some decline in prices of bond etfs, but the volume of numbers is not strong. In other words, people arent taking a lot of money out of these bond funds yet. I would say this story is still not over yet. End of the mall business . I dont think so. Fantastic numbers. Occupancy rate 95 . Average rent per square foot, up 3 . High end mall business, not over yet. Guys, back to you. Thank you so much, bob. See you in a little bit. Lets get to bonds and dollars this morning. Good morning, rick. Good morning, carl. As we look through equities, of course, give us a great clue as to the fixed income markets. Europe, stock markets mostly under pressure. Nikkei breaks out of the crowd. If you look at the interday chart of 10s, closing at 202. Here we are at 199. Yields trading a little lower than that even. We see the safe harbors, price up, yields down. Very similar patterns to the 10year there as well. But thats where the similarities end, because were back to that relationship of Southern Europe rates moving up. Weve heard a lot about italy and spain today. You listened to bob on the spanish side, corruption, italian side, very interesting, yet maybe market destabilizing. Politics going on. Both those yields, spanish and italian, 10s are up yeartodate charts show. Were up a bit, sixweek highs on the spanish 10year. But we need to watch this. As politics and corruption, excuse for paying more attention to unemployment and the economic realities in those regions. Euro versus the dollar, yes, its coming down. You cant even pick up around 11 15 eastern on friday. Big reversal going on there. Rick, thank you so much. Rick santelli. Lets check out the latest news in energy and metals. Sharon, the stronger dollar is really the driving force today. Certainly the driving force across the board in the commodity sector. Oil prices are pulling back slightly after weeks of gains. Weve seen brent crude up for about three weeks straight. Wti up for about eight weeks straight. Just in the month of january alone, up about 5 to 6 . Were seeing a little bit of consolidation here. Were also looking, though, at some outliers, platinum is one of the biggest gainer in the metals complex. Its at a fourmonth high right now. Anglo american has come out talking about the fact that theyre still seeing concerns with supply challenges in south africa. That is the main driver that has caused the runup that weve seen in platinum prices. The reason its at a fourmonth high. And of course, 72 of the worlds platinum supply comes from south africa. Platinum up about 10 so far this year. Meanwhile, gold prices basically flat. That seems to be the metal that folks want for 2013. Melissa, back to you. Thank you very much, sharon epperson. Coming up, the man who said apple was mispriced at 700. If you have listened, you would have saved yourself a 35 loss. Find out what his next big move in the stock is going to be, as we head to break here. Take a look at this mornings early movers here on wall street. If youre taking pills for type 2 diabetes and youre still not getting the control you want call now or visit controlispossible. Com. You have a chance to help control your blood sugar for yourself and for those who depend on you most. With your free chance at control kit, youll get facts about insulin and how it can lower blood sugar. 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Trying to make sense of the blackout at the super bowl last night. There is one man who can answer both of those questions with equal expertise, and that is jim cramer who joins us on the phone this morning, fresh from a week in new orleans. Jim, good morning to you. Good morning, carl. How are you . Were good. Youre at the airport wait forg your flight . Whats going on . Thats exactly right. Were headed to the airport. Ive got to get back. Beyonce, very good. Ive got to ask you about the game. Lets deal what were dealing with out of europe on the market this morning. How serious is this . Im going to say not serious. I think the market needed a breather. I dont think europe is driving up anymore. [ inaudible ]. What would be on your buy list, cramer . We talked about the europeans. [ inaudible ]. Were having a hard time hearing you, jim. I want to find out, but well have to find out in person tomorrow what you did in the 38 minutes when the lights went out. I have to tell you, first you have no doubt theyll fix it. It is the nfl. Now, it is new orleans. [ inaudible ]. Jim, safe travels home. Well talk to you later in the week. Maybe tomorrow. Depending how quickly you can get back. Jim cramer in new orleans today. What a weekend he must have had. Of course, as you know, lights out at the super bowl last night after an electric performance for beyonce. The power went out for more than a half hour. Besides the ad buyers and sellers and 49ers who really benefited the most from the 34 minutes of blackout, squeak us at squawk street. Well have your responses throughout the morning. The ceo of Dominos Pizza joins us live with a look at their super bowl sales. Well get the take on the economy. Consumers and jobs, as squawk on the street comes right back. 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. He has a fractured beak. Super bowl ads still getting a lot of buzz this morning. Dominos pizza didnt air its own last night, but they did make a cameo in an ad by cocacola. Here to talk about this and super bowl profits, the ceo of Dominos Pizza. Patrick, good to see you again. Thanks, carl, good to see you. This is your busiest day. Year, i should say super bowl sunday. Were finding out in terms of television ratings, most watched super bowl ever, the most active social media event ever. To what degree do you think that blackout had any impact on business . You know, it slepgtened the game, although posthalftime is kind of when things start to slow down a little bit. For us, it might have been a net, little bit of a good, because it meant the game went a little longer. But really, halftime is kind of when it starts slowing down for us. In terms of ratings, apparently the most watched half hour was between 10 00 and 10 30 eastern time. Which is clearly after the blackout was fixed. Can you tell yet if you saw an elongation of the order trend as the night went on . Yeah, it was a strong night. We were just looking at our digital numbers. We did over 300,000 orders digitally yesterday. And we had a really long period of time when we were doing over 1,000 digital orders per minute. That went on for a half an hour, an hour last night, kind of leading up to the game. So overall it was very strong. And patrick, remind investors how much more you make by a digital order versus somebody actually spending five minutes on the phone or ten minutes on the phone getting an order right. We make a little bit more. The tickets a little bit higher. They use a little more of our menu. The labor is a little bit lower. Overall, its a better experience for the customers. Thats really what matters. And have you seen a big mix shift for this super bowl compared to last super bowl in terms of the use of digital ordinary snerg. Absolutely. It continues to go up every year. Were seeing that spike up on the digital side. It becomes a bigger and bigger part of our game time for us. We had 70 guys from i. T. In last night making sure it was all going right. You know, its a big technical challenge. They hachbld it incredibly well. They did more than just saying, did you try shutting it off around turning it on again . Yeah, they did better than the power last night. Yes. Patrick, streets been relatively optimistic on easing comps, fx turning into a tailwind, maybe the free cash they suggest could turn into higher buybacks. How likely of a possibility is that . Well, you know, clearly, its been strong for us the last couple of years. We generated a lot of free cash. We look at what the best way is going to be to return that to shareholders. Any clues . Are you going to keep that close to the vest for now . I think well keep that close to the vest for the time being. In terms of menu innovations, patrick, whats in the pipeline . What could be the next catalyst . Well, you know, weve got a lot coming. The big thing recently has been the pan pizza. Were really happy with that product. I think the customer reaction has been terrific. And new announcements, well wait on that until were ready. Finally, well leave with a thought on commodity prices. Weve talked about dairy more in the past year than we ever have, patrick. I wonder if you think the worst in that front is behind us. I think it is. I think were expecting flattish on dairy this year. Might be up slightly on other commodities. But overall, we think the dairy picture is pretty good. Quickly on wings, how big of a business is that . Were going to be speaking to the ceo of Buffalo Wild Wings. Theres talk about competition from the likes of mcdonalds and dominos. We certainly sell a lot more pizza than wings. But we sold a total of about 2. 5 million wings just yesterday. So big business for us. But pizza is certainly far more important than chicken wings for us. Obviously you look well rested. So clearly you didnt stay up too late. Patrick, please come back it was a pretty long night. Patrick doyle from dominos joining us from ann arbor. Do you set up your portfolio for more gains or get ready for a pullback . Google getting hit with a downgrade. Tdd 18003452550 when im trading, im totally focused. 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Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. But that doesnt mean i dont want to make money. Stor. I love making money. I try to be smart with my investments. I also try to keep my costs down. Whats your plan . Ishares. Low cost and tax efficient. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. Lets get the road map for the next hour. Europe taking the wind out of the rally. Sending the benchmark index around 100 points this morning. Well find out if this is a temporary setback or overzealousness catching up with investors. Google surging to an all new high friday. One analyst said you should not be searching for much more in the shares. The ceo of Buffalo Wild Wings joins us. Did the super bowl blackout keep people eating chicken wings longer in her restaurants. The industrial average down by about 85 points. S p giving up about 7. 5. Certainly taking its lead from the european markets, which are down more than a percent across the board. Concerned about possible corruption in spain. We saw the spanish 10year yields surge. I think the important thing to point out here is were still above 1,500 on the s p. Through all the euphoria of dow 14,000 on friday, it was that s p move that technically is the most important, and so far we have appeared to have held. It is blackberrys first day trading under a new symbol, bbry. We have a look at the company and whats in store for the stock in the future. It didnt seem to be the phone, it was research in motions change of Ticker Symbol to bbry. And that was what were seeing at the nasdaq. No longer r. I. M. M. It is worth noting that rims name doesnt completely disappear after the change at the annual meeting later this year. The stock has fallen about 12 since that event last week. Many calling it a classic buy the rumor, sell the news trade. Shares sharply higher this morning. Traders saying given the sharp pullback in the stock, that the current levels seem attractive. Also upgrade by bernstein helping the stock. The analyst writing that first blackberry has drained channel inventories over the last 12 months and it is in a strong position to start shipping its new devices. Second, its supported by most operators. And initial corporate demand will be strong. Thank you very much, seema. We have breaking news. Lets get to rick in chicago. December factory orders increased 1. 8 . And that increase is lighter than the expected 2. 3 to 2. 5 were expecting. Last month, originally released unchanged in november, is now showing down. 3 of 1 . Side bar, tomorrows ism service, we did see improvement in the isms. New york out this morning, 56. 7. Better than the 352 we expected. Back to you. Thank you very much, rick. Lets focus then on the markets and where we go to from here. Jeff is the chief investment strategist with raymond james. And the chief investment strategist. Welcome to the program. Jeff, where does the market go from here . Well, the markets had a long run. The typical buying stampedes tend to last 25 sessions with only one to threesession pauses or pullbacks. Were pretty long in tooth, overbought. That said, it still feels to me we could trade marginally higher toward the state of the union which i think is going to represent a point of letdown for the markets and well finally get a 5 to 7 pullback. That will tell us a lot about the future direction over the next few months. Would you agree with that, and is it worth pointing out that for the last two years, 2011, 2012, we suddenly got an eruption from europe. The bond markets fell off and the americans felt the pain. Do you feel thats about to happen again . No, i dont. I do believe that europe is basically stabilizing. If you look at the Market Performance, since the ltro was announced, its up about 40 . Ive got your end basically 1675. While i dont disagree there could be a pullback, the market is undoubtedly onboard. I would look at this as a buying opportunity. Keep in mind were just beginning why do you say overbought . What does that mean in practice . Well, technicians will tell you that weve had a number of stocks trading over there, 50day moving oonch ishlg, quite substantial. For most technical indicators, it is somewhat overbought. We do see a 5 to 7 pullback, around the state of the union address, and then right afterwards we go into what could possibly be sequestration, what do you ultimately see the path of the u. S. Markets to be in the next, you know, six months or so . I think the Dow Jones Industrial average is going to make new alltime highs, just like the trannies did, the transportation averages did back in midjanuary. That will confirm for even the most doubting of dow theorists that we have a dow theory buy signal. I think that i agree with carmine, i think pullbacks are for buying here. The housing figures and auto figures are looking good to us. Now that were getting a lis dysfunctional government, folks are focusing on the good things going on in the country. On the cyclical adjusted basis, the repeat of the market is around 16. Some would say, therefore, that stocks here might look expensive. You work for a japanese bank. Is there greater value overseas . Is there greater value in parts of asia at the moment . Well, first, i think you have to appreciate the fact that the market has doubled, more than doubled since march of 09. Earnings have doubled. Its actually come down. The longterm multiple is 16. The reality is the longterm Interest Rate on average overall period of time has been about 6. Were about a third of that today. So you should be trading substantially er. Interest rates are a very different environment, very different situation today. Overseas, i do think the emerging markets do represent a much an excellent buying opportunity here. I think they tend to outperform the u. S. Going forward. Jeff, of which of these two Asset Classes are the most dangerous, in your view . The long end of the bond market or gold . I would think the long end of the bond market. Ive been in this business for 42 years as of last month. Ive seen the long treasury bond go in a 3 yield to almost a 15 yield. People think they cannot lose money in bonds. Im here to tell you, you can lose a lot of money in bonds, especially in bond funds. So i think you need to be very careful with the fixed income side of your asset allocation. Guys, well leave it there. Thank you for kicking off the week with us. Thank you both. A couple of insiders making profits off the rally. Kayla tausche has more on that. Perhaps the biggest signal of confidence in a company is when the executives and directors start scooping up shares. Much of that happened during the crisis, and several holding on to outside gains. Insider scores which tracks this activities crunched the numbers on which are best. These are not compensation related. Which of these were the most welltimed from october 07 until now. Lets start with the banks. No sector was in dire strats than this. Former bank of America Ken Lewis bought more than 2 million in bac shares in early 2009, and since then the stock is up 130 . Now, we should note, lewis could have exited this position when he stepped down, since former executives no longer have to file with the s. E. C. If hes still in the trade it would have been more than doubled. Same for jamie dimon, he bought 11. 5 million in 09, its up 105 since then. He bought more in july when the stock bottomed on the london whale blunder. His loot has gained 18 million. Moving to retail, dillards ceo swooped in in 2008. He bought 9,000 shares at 1985 in april of that year. 100,000 shares at 393 in october. Dillards now trades at 85. So dillards, 571,000 initial investment is now worth nearly 9. 3 million. But the biggest winner, Las Vegas Sands ceo sheldon adelsen, up 1,700 since then. His stake swelling by 629 million. So for people who are questioning where he got the political capital, look at his shares in lvs, up 129 million, guys. Thank you very much. Lets take you to germany, if we may, and show you a News Conference were monitoring. Normally this wouldnt be relevant for u. S. Investors, but this man is meyered in scandal. This is the spanish Prime Minister. The allegation is that his party in spain benefited from 34 million of funds in a Swiss Bank Account over many years. And the fee specifically was paid 34,000 a year between 1997 and 2008, in a kind of a shadow ledger for the ruling party in spain. The issue is, if this is not this scandal is not knocked on the head, you could be talking about an election, a snap election in spain, is the fear. And if that happens, as the polls suggest at the moment, you would have deadlock. Because Neither Party would have a sufficient majority to govern at a time when spain has to make some very difficult decisions. Not only could there be snap elections in spain, but theres one in italy. And on thursday and friday. We also have an ecb meeting on thursday in which mario draghi will make a News Conference. One newspaper publisher out with earnings. Lets send it back to headquarters for a market flash. We are watching ganet this morning, which is having a rough time. The largest newspaper publisher by circulation seeing Fourth Quarter earnings drop 12 . Higher restructuring related charges. Now, revenue growing in the digital operations but declines in print advertising, continued to weigh on the newspaper division. Melissa, back to you. Thank you, josh lipton. Meantime, google is pulling back from a 52week high after being hit with a downgrade today. [ male announcer] surprise youre having triplets. [ babies crying ] surprise your house was built on an ancient burial ground. [ ghosts moaning ] surprise your car needs a new transmission. [ coyote howls ] how about no more surprises . Now you can get all the online Trading Tools you need without any surprise fees. Its not rocket science. Its just common sense. From td ameritrade. From a blackout to a nail biter of an ending, not to mention the commercials. Last nights super bowl was one to remember. Brian . Melissa, you couldnt really script what we saw last night. At least what we saw at the Mercedesbenz Superdome. The ravens won 3431. Evaluating the ads, completely subjective. They all do their own metrics. Same with the slew of media and pr firms out there. According to tivo, the most reviewed ad was the taco bell ad. Late night munching i guess is alluring to some people. The ad meter, they chose budweisers clydesdale commercial. The trainer reuniting with his horse. Unfortunately were showing the wrong ad. Last year it was halftime in america. This year chryslers jeep paid homage to troops coming home. Absolutely worked for me. As for working the godaddy ad, according to a group, it received almost 1 million views. On youtube, it had more thumbs down than thumbs up. In the past, it hasnt really been a negative for the brand. But you make your own. Reportedly that cast needed more than 45 takes. Good for actor jesse highman. Bad, guys, for us. I am looking at the list in usa today, its the bottom commercial in terms of consumer response in the rating. I had an argument with somebody before the show about whether or not it was in the end good for godaddy. It sounds like theyre getting business out of it. Theres a lot of debate whether the Danica Patrick theme is something they need to continue to do. They certainly refreshed it. They dont seem to mind that negative buzz. Because we are talking about it. And that seems to be the most important thing. I will tell you, even thinking about the sound, still gives me the creeps. It was creepy. Youre not alone in that department, brian. Incredible. What did you think, melissa, good, bad, indifferent . I thought it was good in that we are talking about it. Thats the point. Getting the ad rejectd and having to retol it, it provided many more weeks for that story to flourish. And for us to talk about sodastream. Thats actually what ads are all about. I think simon and david are unmoved. I think its divided between what good looking men think of the ad and bad looking men think about the ad. Attractive looking men think its a great ad. You dont like it. But youre spear humre superhu best buy and blackberry, and maybe a little herbalife, too. Hey, herb. How are you doing, carl . In terms of the ads and what they mean, in this case for those two companies, the best buy ad was a fabulous ad. Does it really mean anything down the road . No, other than to say were still here. Blackberry, i would argue that it puts a stake in the ground. But actually, in the end, the stock today isnt up because of that, its up because of an upgrade. All right. To the point. Thank you very much, herb. Herb greenberg talking best buy and blackberry. Back to business. Markets pulling back from the 14,000 level today. Weve have lots more on what you can expect from the markets. Just trying to gauge how big a problem we now have in europe. 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 all stations come over to mithis is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. At a dry cleaner, we replaced people with a machine. What . Customers didnt like it. So why do banks do it . Hello . Hello . if your bank doesnt let you talk to a real person 24 7, you need an ally. Hello . Ally bank. Your money needs an ally. Another firm commenting on google this morning. Downgrading the stock from outperformed to market perform. Maintaining the price target of 790, and citing a change in investor sentiment, saying google is a less opportunity for investors. The analyst from bmo this morning, good morning to you. Good morning, carl. It sounds like in your view, nothing about the company itself has changed other than the 39 run from last summer. And there are a few things that could ignite your excitement. Some of these valuation calls get some analysts into trouble. You have no hesitancy about this . No. I think that the stocks have performed well. The markets performed well. And notwithstanding that google and another name, facebook, that we downgraded last week are Great Companies that are doing great business these days, you know, markets are showing time and again they need new catalyst to move higher. These were two names that we thought a pause was in order. And well wait for a market pullback or look for some new catalyst. Speaking of those catalysts, you say, a, new motorola products, would they be greeted positively. That could get you more active on the stock in the future. How likely is that . Well see. The company went to Great Lengths to emphasize that theyre working through a backlog of Product Design at motorola, that they inherited through the acquisition, about a 12 to 18month backlog. So when you start looking towards the back half of this year, and maybe around the holiday season, we could see some new designs, some new devices coming out of motorola that are google born and bred. Thats the type of thing that could get people excited again about the stock. Dan, im curious, if this is not a stock that fits a criteria for Value Investors, does it fit the criteria for Growth Investors . Or is google in nomans land . No, i think it very much fits the profile of a growth or Technology Oriented investor still. 17 times forward pe is not uncompelling for them. Theyre used to more highly valued stocks. When you look at the performance of google over the last six months, it was that incremental Value Investor who was often looking at the stock for the first time, that had come in and powered the move, 40 move since the summer. For the long term oriented growth investor, we think google remains a core holding. Dan, what are you saying to investors about what the ftc did on friday . Clearly the government is increasing its scrutiny of mobile devices. The federal trade commission now saying the mobile industry should include do not track features in software, and apps, and take other steps to safeguard personal privacy. What is your view on that . Who does that impact, if any . Well, i think, you know, always when you look at a group of large cap internet and technology stocks, privacy issues are always going to be relevant. You know, so across my group with google and facebook, they often get ahead of the attention. But there are a lot of companies that this impacts. The thing that i would say about privacy is that its a process that moves in small steps, in coordination with regulators. But ultimately, its the consumer thats going to drive that type of policy going forward. So is it a benign force at the moment as far as investors are concerned . Do you not have to worry about it, is that what youre saying . I dont think its so much that you dont have to worry about it, its whether or not the ecosystem that drives Online Advertising is going to dramatically change. And i dont think theres anything that were looking at on the horizon thats going to dramatically change it. Are the Companies Going to have to make incremental small changes throughout . Absolutely. But i dont think thats a game changer for their business models. You talked about youtube monetization being a potential catalyst as well. Were hearing rumblings about charging users to access their contacts. Is that going to be a 2013 phenomenon . It could be. Thats one of the things we mentioned in the downgrade, are one of the catalysts, we could get more productive on if we hear a little bit more about it. I mentioned the company climbing this wall of worry around their pricing declines this year, was the major factor driving the stock over the last six months. Another one has been investors coming to understand how youtube is gradually edging its way into television advertising, i think thats well understood in the stock now. If we get a more dynamic story around youtube, like, for example, paying for subscriptions, where a value or a media investor could look at it as a cable network, that is something that would definitely be interesting. Dan, last question. I want to follow up on the notion that this should be a longterm Growth Investors, r which would imply that the pe of 17 times would be able to be sustained, and or grow from here. If im somebody sitting at home, i might be a little confused, because im thinking aloud, this guy is saying its a core holding for a longterm growth investor. I want to go where the growth is in the technology sector. Why doesnt that make the stock a buy . Well, i think the we always have to come back to valuation. When you look at the stock thats gone from 12 times to 17 times, when were talking about further price appreciation, thats going to be a challenge. That idea of a core holding is to the point right now, weve downgraded the rating to outperform, not underperform. And that should be interpreted as saying this is a core holding. But its not something weve put new money to work in right now. Instead, we maybe look elsewhere to do that. And instead, look for a better entry point on google. All right. Dan, appreciate your time. Fascinating notes today. In the meantime, down 104 points on the dow. Health Insurance Company humana on the move. Simon, reporting a profit of 1. 19. That was enough to beat the street. More importantly for investors, the outlook, the Health Insurer offered firstquarter earnings that topped estimates and reiterated its 2013 earnings. Remember, of course, everybody watching this industry as we get ready to see what the impact of obama care really is on the sector. Back to you guys. All right. Thank you, josh lipton. Apple is not participating in the broader rally over the past three months. Will that change anytime soon . Find out how you should be playing apple and the rest of the tech sector right after this break. [ male announcer ] lets say you pay your guy around 2 to manage your money. Thats not much, you think. Except its 2 every year. Go to etrade and find out how much our advice and guidance costs. Spoiler alert its low. Its guidance on your terms, not ours. Etrade. Less for us. More for you. [ kitt ] you know whats impressive . A talking car. But ill tell you what impresses me. A talking train. This ge locomotive can tell you exactly where it is, what its carrying, while using less fuel. Delivering whatever the world needs, when it needs it. After all, whats the point of talking if you dont have something important to say . About an hour into trading. 7 31 on the west coast, 10 30 on the east coast. Acme packet shares rallying on the news, up 22 . Blackberry catching an upgrade from market perform over at bernstein. Higher orders for commercial and military orders. Weve still lost dow 14,000 today. Down currently about 96 points. Good morning. Good morning. What does this loss mean . At this point, i think you have a big game yesterday, and we dont have anything coming out of washington for another three weeks. A little bit of dirth between pitchers and catchers. Eco data, not impressive this morning. We had a mixed bag of earnings, the ones that did well were rewarded handsomely. Those who didnt got trashed. We start to look around the globe and they say where can we drill down into. The equity markets will be finding the names. We managed to rally on when we knew the economy didnt friday, obviously weekly expirations that people trying to peg to. You have the momentum in psychology. People want to see that number. They want to break out the hats and thats it. Monday morning, its time to actually take a revisit. Do you think this is an environment where the big cyclicals play well . Or do you still want to have a big piece of your allocation defensive . Traditional defensive names, people were saying, get out of health care perhaps. I think thats actually a huge area for upside potential. People are still sorting out with the aca actually means and what it will mean for the companies that have exposure there. The i would look into the sectors that are hot and starting to build up a little bit of steam. Energy. You still have to keep an eye on financials. Financials and Home Builders are linked together, youll get jobs, and financials will be the fuel that powers the engine for the economy. Dont we need technology to participate for us to go higher . I think you do, just because of the weightings are there. Clearly with the amount of pullback apple has seen, its not necessarily important. But dont forget, if you have mergers, consolidation in the industry as we see with oracle this morning, Great Purchase there. I would like to see maybe two or three mergers every monday instead of just one. But thats a good deal. Provided we hold 1,500 on the s p, is everything okay . I think everythings okay. And its kind of a thats a dicey word to use. But yes, everythings okay here. I look toward the end of the month to see, do we head much lower or incrementally gain over the First Quarter. Thank you, joe. Apple shares noticeably absent from fridays big rally. For the month of january, they lost 72 million. Trading lower by 14 . The worst january for the shares since 2008. Were joined by an apple shareholder, dan morgan. Apple has been on the buy list since 2004. The company owns more than 34,000 shares. Dan, great to speak with you. Hi, melissa. Given your longterm track record with the shares, have you used the pullback to add to your position . You have to remember, melissa, as you said, weve had it on there for such a long time, the stock has gone up almost ten times since we originally added it back in 2004. For a lot of accounts that have been with us for a long time, its become in some cases actually a concentration worth above 10 of the equity portfolio. Personally, in the account that i manage, ive added a little bit here and there. But because its already such a big position, its hard to say lets double up on a stock thats up ten times, you know, at 450. For new money thats coming in, new accounts, that it makes sense for, in terms of their risk tolerance, obviously its on the buy list. So its a stock we would add to, as we would any other stock on the buy list. At what point do you start questioning apple . Youve got a buy rating on the stock and you see whats going on with apple specifically, and more broadly in the smartphone market. The trends are the same for the company as well as the industry. Average selling prices are coming under pressure. Margin is slowing as well. The market is becoming much more fractured in that there are so many participants in the market. Its just dividing up the market share more. Dont you think maybe its not a buy rated stock anymore at any point . You have to bear in mind, melissa, every time apple goes through a cycle with a new product introduction, we see slimmer margins, very similar type of situations. So were not quite ready to put the brakes on on the stock and say its different this time, things are going down the tubes. Like what happened with nokia, or r. I. M. , all these are very similar situations where they were on the top of their game and they lost market share and so forth. And someone else came up like samsung with apple. I dont think were quite there yet. Weve got to give them a little bit more time to see if they can penetrate into china. Weve got the new tv coming out. That could be exciting for them in terms of holding a new product launch. I think its a little bit early, melissa, to throw the towel in and say, hey, apples done, lets move on and go somewhere else. We usually learn the best lessons by mistakes in here. I dont hear you saying, i made a mistake, we should have cut our positions at all. Yet surely youve had a huge amount of value destruction for your investors. Youre right, simon. But you have to bear in mind, a lot of people are way up on it still. But youve been passive to the point of not actually managing the funds arguably. I mean, somebody could say to you, youre not managing this terribly well. Look at the money weve lost on apple since 700. That would be a fair comment, wouldnt it . Simon, do you lose money when you have a gain . Or do you lose money when you buy something at a certain price and it drops below where you bought it . Do you never book profits . You have to remember, too, each account is a little bit different. It depends where we bought the shares. Do you think that weve owned it for nine years, lets say youve been with us over that period of time, its still up ten times from where we originally bought it. Before it was up, what, do the math on 700plus a share. So i understand what youre saying, simon, but you have to bear in mind that youve lost some of your gain, but you havent lost principal if you held it over that cycle. Its a fair and good point, dan. Each account has a different horizon and risk tolerance, et cetera. Even as apple went to 705, to 600, 500, to 435, to 419, youve had a buy rating on the stock the whole time. At the same time weve been getting data points indicating even with the launch of new products, apple has lost share in those categories. Most notably, even with the launch of the ipad mini in the Fourth Quarter, apple has lost market share in the tablet market. I guess what were trying to figure out is, you dont want to be in shares of a nokia or r. I. M. When its going down. Oftentimes it goes down much faster than you can get out of it. How can we apply lessons from the past to managing our positions in apple at this point . Im wondering if you are at all evaluating where we are here with the stock, given the decline that weve seen, and given the just the stubbornness of the stock to stay down here, even with the markets rallying all around us . Melissa, you sound pretty negative on apple. Im not. No, no, you are saying buy it, im playing the opposite side. So youre a good attorney. Well you know, melissa, like i said, i mean, were willing to give it a little bit more room here. Weve had it on for a long time. Weve got a good cushion. Lets just see what happens, give it a couple more quarters. See if they can expand into china, lets see some of the new products theyve got coming out, in terms of the tv. Still, lets give a little more time to see what happens. Youre cutting to something that is incredibly important. I know Retail Investors who are in apple on margin and have been crucified. And still theyre attempting to double down with whatever cash they can get their hands on, because they believe and they have faith. Youre saying the exact same thing now. They still hang in there. Its very painful to watch. Simon, you have to bear in mind their cost basis is a lot different than ours. A lot of those people are momentum investors, and have ridden this apple on a momentum basis, where weve been more fundamentally based and letting it ride out over a long period of time. Bear in mind, too, simon, we manage trust money, which is much more conservative than momentum money, or fast money that you guys are talking about, these quick movements in the stock. Were much over a longer period of time. Its a little different mindset than you might find with some of your viewers, who are trying to do quick trades or quick profits, so forth. A little bit different. All right. Dan, were going to leave it there. Thanks. Despite consumer headwinds and the dow pulling back from 14,000, the Retail Sector one of the top performers since the 07 peak. Could 2013 be a big year to extend that performance in the form of ipos. Courtney reagan has been running those numbers this morning. Good morning to you, carl. It may not feel like the consumer is emanating strength. But 18 of the 42 s p 500 components that have doubled in value since the october 2000 peak, are discretionary names. Many are watching the market for deals. 2013 will continue to be a big one for retail ipos. According to pwc, 2012 saw the highest number of retail ipos in decades. The activity they say will Gain Momentum as the companies aim to expand investment. Bdo executives reveal 30 of them expect an uptick in ipos, up from 23 last year. They believe the u. S. Deal market is robust. Thats due to strong credit and equity markets. He thinks its going to remain true despite changes to the u. S. Tax code. Retailers and brands alike have more than doubled in value since its initial public offering. A strong Distribution Strategy and solid Brand Perception among domestic and international consumers. Thats all part of the equation thats head to success for michael kors. Private equity firm kelwood, sources say the firm has been considering an ipo since the fall. And now that that lawsuit has been settled, some speculate an ipo may not be far off. That will be a big one, garnering lots of attention if and when it does happen. Simon . It is going to be a fascinating year. Courtney, thank you very much. Subjective apple, did you read over the weekend that the amount of market cap that apple has lost since september the 21st is 35 times the current value of blackberry. Thats the scale of the value that has been destroyed in apple. Take a look at where the dow is trading at the moment. We are now moving back downward, 117 points. Having lost 14,000 at the open. After the break, were going to talk about that. And how did Buffalo Wild Wings fare on their busiest day of the year. And how about not advertising during the big game. Find out when the companys ceo joins us next, wings on a monday morning. Tdd 18003452550 and the streetsmart edge Trading Platform from charles schwab. Tdd 18003452550 gives me tools that help me find opportunities more easily. Tdd 18003452550 i can even access it from the cloud and trade on any computer. Tdd 18003452550 and with schwab mobile, tdd 18003452550 i can focus on trading anyplace, anytime. Tdd 18003452550 until i choose to focus on something else. Tdd 18003452550 all this with no trade minimums. Tdd 18003452550 and only 8. 95 a trade. Tdd 18003452550 open an account with a 50,000 deposit, tdd 18003452550 and get 6 months commissionfree trades. Tdd 18003452550 call 18662945373. To compete on the global stage. What we need are people prepared for the careers of our new economy. 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Im janet long and i formed my Toffee Company through legalzoom. I never really thought i would make money doing what i love. [ robert ] we created legalzoom to help people start their business and launch their dreams. Go to legalzoom. Com today and make your business dream a reality. At legalzoom. Com we put the law on your side. Restaurants everywhere were gearing up for super bowl xlvii. Buffalo wild wings was no exception. It was prepared to serve more than 8 million wings last night. What about choosing not to advertise during the big game . Here for cnbc exclusive is sally smith, president and ceo of Buffalo Wild Wings. Good morning to you. Good morning. So, is a 34minute power outage at super bowl good for chicken wing sales or bad for sales of wings . Well, its funny, social media was abuzz last night about the power outage. And perhaps it was brought to by Buffalo Wild Wings. I like any kind of a game that extends the time that our guests can stay in our restaurants. So i would say probably pretty good. How did you do overall . And why didnt you advertise . You know, we advertised, certainly, during sporting events, bowl games, a lot of the playoffs and throughout the whole football season. And then, of course, well gear up again during basketball playoffs and march madness. But we have a bowl game, our first bowl game this year that we used, as well as we Just Announced a partnership with ncaa. I think that we look at where we can best engage our guests, and certainly the super bowl is one that we talk about each year. Yeah, but its interesting, because it is an occasion on which a lot of companies are trying to make a lasting impact. Pepsi is obvious with that with the halftime show. We were talking to Dominos Pizza earlier in the program, they were very aggressive on their social media last night. Some might say, you were not. Did you drop the ball . No, i think, in fact, i just got some numbers in. I know we had over 100,000 hits on social media. It was abuzz, as i said, with twitter, from nfl players, to our guests tweeting about the power outage. And Buffalo Wild Wings. So im very pleased with where we ended up. From an advertising standpoint, through social media yesterday. Sally, can you talk to us a little bit about commodities, costs, and specifically the alleged wing shortage that had existed through the super bowl. Im asking this, because there are so many competitors entering the wings space, mcdonalds tested its wings offering in chicago. There were talks if they rolled that out across the country, it would put additional pressure on prices. I think other companies have seen that guests really do love chicken wings. And Buffalo Wild Wings is certainly synonymous with that. Along with the experience you have in the restaurant. We have longstanding relationships with our suppliers, and certainly there has been pressure on the price of chicken wings. But we start working with them well into the fall to make sure we have all of the supply that we need for the bowl games, as well as for the super bowl. Did i read that you were testing an algorithm whereby people wouldnt buy wings like four, six, eight, but actually buy it on the basis of snack, meal or platter, and that way you could save a huge amount of cost . Is that right . Have you introduced that . One of the things that we are testing is wings by the portion. Weve been synonymous with the six, 12, 18, 24 size orders since we opened 30 years ago. And as chicken wings, one of the things besides the high price, theyve gotten larger. So when that guest buys six wings, its certainly a lot more filling than it used to be. So what were doing is trying to sell looking at the portion and perhaps it could vary, if wings are small, youll get more, if theyre large, you might get five or so. Okay. Sally, good to see you. Thank you very much for joining us there. The ceo of Buffalo Wild Wings. Thank you very much. The consumer space, back to josh lipton. Melissa, on this down today, the stock hitting an alltime high with clorox. 7. 1 organic sales growth helped by sales of cleaning products and disinfectant wipes due to the flu outbreak. Raising full year sales forecast. Josh, thank you. Coming up next, Rick Santelli takes on politics, austerity and Economic Growth. As we head to break, take a look at the dow heat map. Red across the board. We have green arrows for hewlettpackard and cisco systems. Covered call strategies to generate income . With fidelitys new options platform, weve completely integrated every step of the process, making it easier to try filters and strategies. To get a list of equity options. Evaluate them with our p l calculator. And execute faster with our more intuitive trade ticket. Im greg stevens and i helped create fidelitys options platform. Its one more innovative reason serious investors are choosing fidelity. 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Is connecting todays leading companies to places beyond it. Siemens. Answers. Welcome back to squawk on the street. Rick santelli here. Live on the floor of the cme group. Wonderful city of chicago. You know, there is a lot of talk and there has been a lot of talk, pretty much not in favor of the principles and definition of austerity. As a matter of fact, wasnt that many years ago where emerging markets, of course, would get into trouble and many would ridicule the imf who would run in with the same plan. Raise taxes, cut services, cut deficits, and that austerity was never given a credible grade, for example, by many investors, thinking, of course, it wasnt a great strategy. I concur. Heres the problem, though. You know, austerity by definition is, you know, deficit cutting with less benefits and services. Now, it is a horrible word. And, of course, many governments and politicians grabbed on to it because they really dont want deficit cutting and they dont want less benefits and services. But it is pretty hard to call it austerity as we go into, what, year six of post credit crisis activity. And Global Economics dont dictate were doing a heck of a lot better, even though we had some jumps in growth, which kind of can be predicated on high levels of stimulus, maybe dont call it stimulus, maybe you call it just three to four years of big deficits. Now, quid pro quo on the other hand seems to be the relationship that dictates who the big buyers are of very high quality, relatively speaking sovereign debt, whether it is boons, treasuries, guilts or ooth oaths. We need a whole lot less quid and a lot more pro growth. Thats what we need. We need some growth. We need to grow. Just look at the auto industry, for example. Phil lebeau has been covering it. Where is the fly in the ointment been . Auto sales in europe, the bottom is falling out. Look at spain, italy, france, to a lesser extent germany. Even though our growth rates are like the old days growth rates in europe, deficient, in the end, the japanese are weakening their currency, the euro had been pretty high, it is going to be germany and their exports versus japan and their exports. Where is this battlefield going to be . Most likely, a in the Foreign Exchange markets, and, b, right here in your own backyard. Melissa lee, back to you. Rick santelli, thank you. Tweet time. It was lights out at the super bowl last night. The power went out, as you know, for more than half an hour during the Third Quarter. Besides the ad buyers and sellers and the 49ers, who really benefited most from the 34 minutes of blackout . Tweet us. We got your responses and they are next. [ male announcer ] youre not the type of person who sets goals and only hopes to achieve them. 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Prescription celebrex can help relieve arthritis pain so your body can stay in motion. Because just one 200mg celebrex a day can provide 24 hour relief for many with arthritis pain and inflammation. Plus, in clinical studies, celebrex is proven to improve daily physical function so moving is easier. Celebrex can be taken with or without food. And its not a narcotic. You and your doctor should balance the benefits with the risks. All prescription nsaids, like celebrex, ibuprofen, naproxen and meloxicam have the same cardiovascular warning. They all may increase the chance of heart attack or stroke, which can lead to death. This chance increases if you have Heart Disease or risk factors such as high Blood Pressure or when nsaids are taken for long periods. Nsaids, including celebrex, increase the chance of serious skin or allergic reactions or stomach and intestine problems, such as bleeding and ulcers, which can occur without warning and may cause death. Patients also taking aspirin and the elderly are at increased risk for stomach bleeding and ulcers. Do not take celebrex if youve had an asthma attack, hives, or other allergies to aspirin, nsaids or sulfonamides. Get help right away if you have swelling of the face or throat, or trouble breathing. Tell your doctor your medical history. And find an Arthritis Treatment for you. Visit celebrex. Com and ask your doctor about celebrex. For a body in motion. Who doesnt love the smell of a new car . Well, how about the smell of a brandnew bentley in your hotel room . Robert frank explains in todays Million Dollar minute. The only thing better than driving the new 2013 bentley mozan is driving it to your own Bentley Hotel suite. I think the first thing that really strikes everybody when they walk in, it is the only suite in the world that smells like a new car. This is the bentley suite at the st. Regis hotel in new york city. It smells and looks like a brandnew bentley. The same materials used in the car are built right into the room, which costs more than 500 grand to design. Even the curtains are made with the bentley seat belt and for those who like to sleep in their bentley, here is a king size version with the classic bentley leather and have near. And then the chandelier pieces, you can see, the bulbs are the same bulbs used in the headlights. The suite costs 9500 a night. Some of the perks, your own personal butler and access to the first 2013 bentley mozan in the country, with a price tag of over half a Million Dollars. Robert frank joins us on set with more. I would think that the number of people who want to say in the bentley suite are kind of small. The price tag dictates that, right, 9500 a night. And they say that men really like to stay in the bentley suite, so what happens is the men want to stay there and their wives insist on staying in the tiffany suite in the same hotel. Thats how they make money. Very expensive evening out. Yes. Two days, almost 20 grand just to stay there. Thats how people divvy up you get the bentley and bling in one. Tiffany suite. It smells like jewelry. Like diamonds. Smells like diamonds. Does this work when Car Companies try to market out of the car market . A lot of super Car Companies are trying to become lifestyle brands. They all have watches, right . Bentley watches, fry watches. Porsche. Porsche does kitchens. You can do dishes really fast, i guess. Not sure what the point is there. But ferrari was going to design homes for a while. Not sure what happened there. But i think there is a limit to this, especially when you get into the home design stuff. A lot of these guys who own bentleys or ferraris, theyre freaks and want to freaks. They want to wear the clothing they want to live the life. The danger is you dilute the brand. Look at yves st. Laurent, spent a fortune trying to bring it back. Hermes helicopter, a helicopter with hermes a hermes helicopter, right, i think the cross branding has its limits. You make the point, a lot of the elements are made in the same plant that makes the stuff that goes in the car, right . It was cool. Those curtains made from the seat belt material, i mean, every little detail, they did a great job, especially the leather, the seat belts, the lights. It doesnt look weird in the hotel room. It does feel it does look weird. There were seat belts hanging up against the window. Come on. Do they have to refresh the smell every single time the guests leave . I dont know how they do it. But when you walk in the wall is leather and it is the same leather, you walk in and, poof you get the smell. It is amazing. Wow. Thank you, robert. Great stuff as always. Whats coming up tonight . Market watcher, a bull on who calls for 1600 on the s p 500. Marion bar tell joins us for the technical take. See you tonight. Thanks, guys. See you later. If youre just joining us this morning, heres what you missed earlier on. Welcome to hour three of squawk on the street. Heres whats happening so far. I dont think it is about the fed. I think it is about the economy. Not only here, but in china, in europe, in japan, coming up better than we feared 30, 45 days ago. If youre interested in buying stocks, right, what youre interested in is the earnings of these Companies Going up, will dividends of the companies go up, will the stock buyback programs go up . And the answer to all of that is, yes. Interesting that we are revisiting europe in a way perhaps that people had become almost ignored to. A lot of investors have regarded this rally that we have seen so far as, you know, too far, too fast. My sense is it might not be. I think we could actually go higher from here. We did over 300,000 orders digitally yesterday. And we have a really long period of time that we were doing over a thousand digital orders per minute. I think it is probably the divide between what good looking men think of the ads and what bad looking men think of the ad. You dont like it . Youre super human. Good monday morning. Welcome to the third hour of squawk on the street. Want to get right to david faber at post 9 with news regarding the rumors of a dell lbo. Want to update everybody to the extent we can. A great deal of focus we anticipate on dell and whether and when that leverage buyout, enormous leverage buyout, will take place. Still have a bit more to share with our viewers in terms of that as we watch dell shares hovering right around the 13. 35 share mark. I can tell you that this has been at the board level for some time. But my sources indicating that it is at least coming to a head, as you might expect, given we had anticipated an announcement early this week. And that does appear to be the still the expectation. Perhaps not today, but as soon as tomorrow we may very well hear of a dell lbo. Now, the price talk that ive been sharing is 13. 50 to 14. May get closer to 13. 50, in that range. Not certain as to price. And, again, there is still negotiating going on between silverlake and its partner michael dell and the special committee that dell has set up to negotiate with those two. There is still some back and forth going on, but it does appear they are coming very close to getting on a on to agreeing to a price that is close to 13. 50, lets call it 13. 60, 13. 70, i dont have precise numbers for you but i share them because we have watched the stock be volatile over the week or so on various reports and it looks like theyre honing in on that 13. 50 level at this point. Much already has been reported. And will be the same as i have reported, namely microsoft will be involved to the tune of roughly 2 billion. Theyll own a security not quite equity, not quite debt. There will not have any rights per se in terms of the governance of dell, but will certainly have contractible rights to the use of their product, make sure that Dell Computers use that microsoft product. Michael dell will tap outside funds to help fund his equity contribution, in addition to the 15. 7 of dell shares hell roll into the deal. And youll have a financing not quite 15 billion, because it is coming down a little bit because of the 2 billion being put in by microsoft, the equity check overall, roughly 2 billion. And youll also have that repatriation of cash. So much has kind of continued to be on the same page that we told you about a couple of weeks ago. But, carl, they are getting very, very close. Now, as always, having reported on deals for longer than pretty much anybody at this point, we can tell you never know at the end. We have a special committee, aggressive buyer here that doesnt want to go too high. But it does appear they are in line at this point for announcement, i would guess, as soon as tomorrow morning. Those who wonder what is taking so long, we were talking earlier this morning, said a lot of it has to do with the fact that word of the deal got out relatively soon in the process. Thats right. I said that this morning, thats the case. You had a leak happen before there was even a merger agreement, and so you had a lot of process that had to be gone through before you got to this point. And, of course, we have all been following it very closely since bloomberg first brought us word this is a possibility some weeks ago. So that is why you heard so much, the back and forth, this is what goes on typically during a deal and well read all about it in the background section of the proxy at some point if and when that gets filed, when we finally get the deal. But, again, it does appear online an announcement as soon as tomorrow morning. Appreciate you sticking around longer. Check on the markets, here is the dow, down 116. Triple digit loss. S p down 11. Watching that critical 1500 level. Nasdaq down 21. Oracle today agreeing to buy Ip Communications company acme packet for 2 billion. 2925 per share offer at a 22 premium to acme packets friday close. And rims new name and Ticker Symbol official at the nasdaq this morning, though formal approval does not come until the smartphone makers annual meeting this summer. Stock catching an upgrade to outperform at bernstein over enthusiasm of the blackberry tens debut. The retreat from 14,000 after januarys big gains, can the rally hold or are we on the verge of a major pullback . Laslo berrini says dont uncork the champagne just yet. Laslo, welcome, as always. You say in your note, were not ready to uncork the champagne, though we have put some on ice. What does that mean . I think round numbers are important to look at. And 1500, some consolidation, may take some time. Interesting historical fact in 1996, the dow bumped up against a thousand. Dow jones says it traded above a thousand. It did not. It took six years, 1996 to 1972 before traded above a thousand and two or three days later foreclosed. So round numbers are shouldnt just be cavalier about them. You say 1500 on the s p has proven to be a real obstacle for the market. Why . People look at the round numbers, bring out everybody, people draw their attention. Nasdaq went to 5,000, traded two days there. So i wouldnt go out there and get too enthusiastic. Large part of your note this month is about targets. And the number of people out there. I should have a target. Seems like everybody has a target. Yours is a 1600 year end level, but a 50 probability. Is that right . More than 50 . More than 50 . We bought some s p december 1. So we have level skin in the game. I think, again, 50 . Not necessarily the end of the year. Could happen before then. I dont think you can really do to me, forecasting is like deciding if you drive from new york to l. A. First of all, lets go to indianapolis. Lets stop in st. Louis. Lets not tell you now where well be then. Who knows what traffic will be like just getting over the bridge. Well, whats working, if, in fact, thats where were headed . History. The great inefficiencies in the market is a real understanding of history. We did a study of market cycles and group rotation a couple of years ago, three volumes. And we decided early on in the cycle that this was going to be like a five, sixyear bull market. And in the last stage, last quarter, thats where things get interesting. Thats where people realize it is not coming back, Interest Rates are not going through the roof. Earnings are not falling to zero. And they realized that maybe there wont be another train to catch. And in the fourth year or the fourth phase of the bull market, in three of the five bull markets that we have so recognized, in three of those five, oneyear toward the end where we really, really were good. 20 plus. And i dont think anyone has thought about that. And so i think the history suggests that, you know, were going to get there. Yeah. We have been looking at tables from s p, for instance, january was 5 plus. And a dozen or so instances where that did lead to a 20 year or 40 year if youre looking at the post war era. Some still want to argue the crisis, laslo, through so many historical comparisons out of w whack, that that machine doesnt work as well anymore. I think, again, history, you know, because in all of these periods, there has been a crisis or another crisis. We look at again the market from a cycle viewpoint, when you have a market which started the way this did, consolidated very nicely, and now all of a sudden youre at a exuberant phase, im still confident saying at some point this year 1600 is at least 55 possibility. I tweeted this morning about your famous call on apple back in the 90s when it was 3. 50. So i think youll get some extra attention today at least because of that. Thank you for stopping by. A mover in the video game space today. Over to josh lipton for a quick market flash. We dont know if s p analysts are gamers, but they do like game stop. S p reiterating a buy opinion on the video Game Retailer and lifting the price target to 28 bucks. Analysts saying the market has unfairly punished gme for soft holiday sales. Telling clients that fundamentals held up relatively well and it offers an attractive entry point helped by the 4 dividend yield. Thanks so much. Apple, one of the biggest losers of the year so far, the biggest on the s p. After the break, well sit down with the guy who said apple was at 700 was hugely mispriced. What is he predicting next and how does that apple victory lap feel . First, Rick Santelli. There are several fascinating articles, one in the journal today about cross border financial flows and all the unintended consequences of some of the remedial medicines app applied. All about europe. Were going to have ira harris with us. Well come back at the same time it took the Mercedesbenz Superdome to get the lights back on. See you in about 20. [ male announcer ] at his current pace, bob will retire when hes 153, which would be fine if bob were a vampire. But hes not. Hes an architect with two kids and a mortgage. Luckily, he found someone who gave him a fresh perspective on his portfolio. And with some planning and effort, hopefully bob can retire at a more appropriate age. Its not rocket science. Its just common sense. From td ameritrade. I dont need to row mind you shares of apple are down since september when it hit the 700 mark. It was on this Program Last Year that we heard a Portfolio Manager explain why he was worried about apple when it was at 620. Heres why. It is not clear to us how long it will be able to keep its edge in terms of technical innovation. The stock price when we do our cash flow modeling appears that the market is pricing in, that it will keep that edge forever. And the number two, it is unknowable how long people will be able to or how much people will be able to spend on devices going forward. Bringing us to our Capital Markets oped. Gary kaminsky with the guy who made that call. Good morning. John, thank you for joining us again. I should also add for those that did not see that piece live, john, you made that call, you wrote that letter at a time where every closet Index Mutual Fund manager was buying that stock, trying to get a position in the portfolio. You avoided the name with a lot of stress by avoiding in terms of relative performance. Lets get to apple today at 450 or wherever were trading at this moment. Is apple stock something youll be buying in the portfolio . Thanks for having me on, gary. You know, as you know, for a long time ive been skeptical on the apple case. Certainly now at 450 it looks a little bit better than it did at 650, 700. But to me, im still a little bit still a little bit skeptical. I would probably wait here. I think the pressure on apples share price is to the downside as more Portfolio Managers are questioning the Investment Case around apple. What makes me skiddish about it is just the fickleness of tech consumers themselves. Right. You know, they theyre very fickle about, you know, the design of products, the capability of products, the functionality and, you know, we just dont know what theyre going to prefer moving forward. Let me ask you about Portfolio Managers. You had clients writing you letters, calling up, you wrote the piece because you had to explain why youre not owning apple. Do clients ask you or is that the forgotten idea that you have to own apple if youre a money manager . Now that it traded down significantly from september, i get less questions about it, obviously. But people do you know, it is a it is still a huge company. It is an iconic brand. Everybody owns their products, not everybody, but a lot of people do. Theyre ubiquitous. People are curious about it. So i do still get questions. On the same day you talked about the kind of stocks you do like. You look at cash flow. Give us two names that are companies that youre buying right now that are attractive based on the cash flows that have better valuations. Yeah, so we Like Companies that are tied to and improving Living Standards in the emerging markets. Two names i would throw out for your viewers are podash of saskatchewan, high quality, asset based, generating cash flow for the next 300, 400 years. Has a 300, 400 year supply of podash, high quality management, great corporate governance, a lot of attractive attributes. The other name i would throw out is joy global, which is involved in producing Mining Equipment that improves the safety and productivity of the mining industry, particularly coal, but also base metals, gold, copper, you name it. The things that kind of keep the Global Economy humming. Excellent. John, thank you so much for coming back. We appreciated your apple discussion back in april. We appreciate the update today. And well see you again soon. Carl, back to you. Yes. Pod and joy, two Ticker Symbols easy to remember. The financials showing big gains, but pulling back today. Which of the big banks should you be adding to your sector . I love making money. I try to be smart with my investments. I also try to keep my costs down. Whats your plan . Ishares. Low cost and tax efficient. Find out why nine out of ten large professional investors choose ishares for their etfs. Ishares by blackrock. Call 1800ishares for a prospectus which includes investment objectives, risks, charges and expenses. Read and consider it carefully before investing. Risk includes possible loss of principal. [ male announcer ] ive seen incredible things. Otherworldly things. But there are some things ive never seen before. This ge jet engine can understand 5,000 data samples per second. Which is good for business. Because planes use less fuel, spend less time on the ground and more time in the air. Suddenly, faraway places dont seem so. Far away. announcer at scottrade, our doncexactly how they want. T with scottrades online banking, i get one view of my bank and brokerage accounts with one login. To easily move my money when i need to. Plus, when i call my local scottrade office, i can talk to someone who knows how i trade. Because i dont trade like everybody. I trade like me. Im with scottrade. announcer scottrade. Awarded fivestars from smartmoney magazine. New developments today in wynns battle can okada. Jane wells has more on that. One year ago this month wynn resorts forcibly bought back the near 20 stake owned by okada at a steep discount. In a couple of weeks, a special meeting asking shareholders to officially vote okada off the board. The company this morning announced developments of combatting what it calls the ongoing Smear Campaign against wynn resorts by okada. First, wynn says it has been cleared by nevada gaming officials of any wrongdoing in a donation it made to the university of macau, a donation okada called suspicious. A shareholder lawsuit based on that donation has also been dismissed in u. S. Federal court. And the company says iss, the influential shareholder advisory firm, recommended shareholders vote okada off the board. Steve wynn and his former partner have been at odds. Wynn resorts saying there may be violation of anticorruption laws and could threaten its gaming licenses if okada stays on the board. Okada filed a lawsuit last week suggesting a 50 million payment by wynn to someone in macau named hoho is highly suspicious, something wynn resorts dismisses aas a ploy. Morgan stanley said says while the reward looks favorable, we do not seek a catalyst neither to drive more upside. Wynn says the rivals in macau are murder tough with blood in their eye. He didnt sound intimidated when he said that on the call. Back to you. One of the all time great feuds. Thank you very much, jane wells in los angeles, talking some wynn. Dow 14,000, a sea of red. An ugly tape today. For more on this market selloff, we turn to mark santela. Were overdue for Something Like this. We had a sellers strike through most of january. On friday, and ive been in i will admit a crowded camp saying sentiment is bubbly, were overbought, nothing too serious. I think youre getting good excuses for a pullback, even if just a little bit of ripples in the water in europe or whatever it is. The economic momentum has not been that strong to give people that extra layer of confidence that, hey, this is a great buy point. Youre not talking negative print on gdp. Absolutely not. People were talking about the citigroup economic surprise index rolled over. People didnt notice. Wasnt a big deal. We were saying look it is good enough for what we need, corporate earnings are coming through, were okay. Some are pointing to the transports today, which let us up and arent down as much. Encouraging or not . I do think it is encouraging. I was looking for the transports to maybe be one of those areas you could cool off even more. So it is encouraging. I dont think anything about what is going on here is that remarkable. One of the Amazing Things to me is how optimistic the public seems to have gotten, given the fact that really not that much headway was made. On friday, we were up 3 from october 5th on the dow industrials. It is not a big move. Just that you didnt come back at all. Didnt back fill, didnt have any stutter steps, just this steady grinding rally. And so thats why 100 points seems like more than it is now. I think the coincidence of the new year and the rally sort of feels like today is fresh. No doubt about it. Look, other things happen at the beginning of the year too. Funds have not only new money, but new kind of risk budgets to spend. When volatility is down you feel like you can afford, you have a lot of the year to play with and you can put on some things you dont have such a hair trigger in terms of selling when things dont go perfect. You say the market is has to show how it handles gut checks, like the one were getting in europe. Thats what i would suggest, yes. How would it play out and what do you make of the strategists who point to rising cap ec guidance, sentiment they dont think is overdone, the targets. I dont think thats very challenging. I dont think you get there in a straight line. 1600 sounds like a big number. It is a 7 move from here. You dont usually get a 7 move by by. 75 . The market takes what it takes in lumps. That is the probability. Overbought, First Quarter of the year, in fact, to me seems more likely to be strong than the rest of the year. I think we have to clear some hurdles. Not to say i dont think the fiscal situation is the thing, but you have to feel like some static is going to come into the picture before too long. Yeah. Interesting to see if the dell happens, the degree to which that affects outside psychology. I think deals have to be a tremendous theme this year. Michael, good to see you. Blackberry, it is now blackberry, though the formal change of the name will be up to shareholder approval. Soaring more than 10 on its first initial day of trading under the new Ticker Symbol. Catching an upgrade to outperform at bernstein. They dont see a larger comeback for the company, but enough of an improvement to increase the likelihood of an acquisition or perhaps a new spot in a niche market. Bell is about to close in europe. I just want to give her everything. [ whistles ] three words dad, etrade financial consultants. Theyll hook you up with a solid plan. Wa wa wait a minute; bobby . Bobby what are you doing man . Im speed dating [ male announcer ] get investing advice for your family at etrade. Simon hobbs, get a look at the close in the uk and across europe. 30 seconds from now. Been a while since we talked about europe in this fashion. This is a very important moment because our two big problem childs in europe are children forgive me, namely italy and spain. The tail risk of political chaos there has come front and center and people are concerned what might happen in europe, specifically on peripheral debt and some of the peripheral stock markets which have done so well. Lets have a look at the european close. The european markets are closing now. This sea of red is why the dow partly why the dow is down 114 points here. We have two specific areas of concern. The politics in spain and the politics in italy, where they have an election in three weeks time. Lets kick off with spain and Prime Minister roy, in germany today. Hes had to defend his government, he says it remains strong and will overcome the accusations that they secretly accepted payments for years and years as an online petition calls for him to resign t has 72,000 signatures. What this man is accused of doing, until 2007 in spain it was legal for politicians to take anonymous donations. He took, it is alleged, 34,000 a year from the treasurers or the party treasurers, 34 million that was sitting in Swiss Bank Accounts. The concern is that were there to be an election, Neither Party in spain would have overall control and therefore austerity could not continue. And the support of the rest of the International Community would fall away. Hes saying i will control the situation, i will fight back, we will put spain right. In the meantime, though, the stock market has fallen heavily. As you saw now, down over 3 . Here are some of the main stocks in negative territory. Banco santander down 4. 5 today. And the bond market sold off from the top of the rally, the bond market sold off in spain. The yields are rising, picking up towards the level that we have not seen for many weeks in europe. Now, in italy, we also have a concern. Partly because we have the election in three weeks time and Silvio Berlusconi and the opposition is saying actually i will offer people cashbacks, rebates if you vote for me. The concern is that mario monti and the left wont win and they would be a coalition that would continue austerity and not rock the boat. The other problem, you can see that some of the banks are down very heavily in italy today. The other problem we have is that it would appear now that the head of the ecb, mario draggy, is inly camplicated in e problems at monty pashe and the failure to regulate it. He was the regulator in italy before he took over at ecb and the concern is that he is now implicated in that. If that election comes through in three weeks time and through all this you dont have austerity front and center, there is a concern that, again, you could get a selloff in peripheral bond markets, notably italy in particular. Many of the big italian banks that hold the bonds are down, and the bonds are selling off. The yields are going to rise on the tenyear italian paper. Lets have a look at that if we may and youll see what i mean with those yields rising. Maybe were not able there we go. Thank you very much. You see the way it is spiking here. Were way down. It is not a huge issue at the moment. But at the top of the rally were beginning to wobble. One more thing i should point out to you, and this is big news if youre in banking in the uk, the finance minister, the chancellor, gave a speech. Jpmorgan, coastal offices, they will break up uk banks if they do not if they do not refinance their retail operations. This is hugely important in the uk where the politicians are under a huge amount of pressure for the failure of the Banking System there. Dont forget it could have been worse had barclays bought the bones of lehman brothers. Back to you. Glad they didnt do that. Simon, thank you very much. A check on energy and metals too. Sharon epperson this morning. Were looking at a pullback pretty much across the board in the commodities complex following what were seeing in the equities market as well as the drop in the euro. Those are contributing factors to Precious Metals and oil prices coming off a bit after big gains in the oil market. Were even seeing gasoline futures coming down a little bit. That is probably some relief to those who are looking at where prices at the pump are right now, the highest on record for the month of february, the start of february. 3. 52 a gallon. In fact, consumers are paying more for gasoline than they ever have before. The Energy Information administration out with a report today looking at 2012 figures, where gasoline expenditures were 2,900 on average, 4 of your Household Income, the highest percentage of Household Income in about three decades. So a lot of pay at the pump and were looking at the price right now, as i mentioned, the highest we have seen for the beginning of february on record. Back to you. Sharon, thank you for that. Sharon epperson at the nymex. Gary kaminsky sat down with John Bertuzzi. Good morning. You should have seen me running down. Tiger 21 on friday. We had fantastic conversations with a lot of people. One of those was John Bertuzzi. There is a great article in the wall street journal, if you looked at it today, talking about why the commodities have not kept up with the equity rally. Well post this interview with John Bertuzzi on cnbc. Com. Check it out. If you own Energy Stocks and want to get a sense of what is happening between the commodity and the stocks. I wanted to focus on one part of the conversation, nat gas. A lot of smart money is making Big Investments in nat gas right now. They have done it before. They think this is the time it is going to work. Lets listen to what bertuzzi told us about nat gas. It is a total game changer. It is one of the most positive economic factors going on in the u. S. All electricity in the u. S. Pretty much is priced off of natural gas so power prices are not going up. Carl, you probably remember Shelly Bergman joined us last week, talked about the move to nat gas. We know the nat gas space is chronically oversupplied. But a lot of smart people down there are making Big Investments in nat gas, they truly believe this is finally going to be the time to get long and stay strong. So check out that whole interview on cnbc. Com, one of the many great conversations we were able to have down there. Back to you, carl. That is a great tease. Welcome back, gary. Great stuff from down there, absolutely. Bob pisani at the big board with a look at the losses and how serious europe really is. How serious is all the corruption allegations, because thats what they are right now. And how much are they going to really impact the markets longterm . There is a sense of hi, were back again, were europe, remember us. Let me highlight and simon gave a good overview of what is going on. Ill give you the 20second explanation, pretty simple. Calls of whether they can implement the reform ideas they had to improve the spanish economy, thats the real problem going on here. Even though there is no not a lot of information that we have on that. And this whole issue about the oldest bank in europe, they made bad investments. The person who was the bank of italys governor at that time was mario draggy. There is no reason why he would know about every investment banker is making at that time. He was their regulator at that time. He is sort of getting dragged into that. The question is, do you get this guilt by association thing, two powerful figures, rajoy and draggy being dragged into scandals in europe that could hurt the Reform Movement in italy and the rest of europe. Thats what this is all about. Reformulating the european economies. Can i just point out, though, put up the spanish stock market. We drop in the spanish stock market, if you look here, we dropped every february six of the last seven years down here. You can see, maybe not 2011, but you can see here, we always have a weak spirit in europe and it is always in february. So im in the sure thats why im sort of not sure how much we should make of all of this. This could all go away very, very quickly. I say hold your fire right now. The markets, we were 13,000. Does everybody remember . Back on january 1st. Here we are. We went to 14,000 and now were down 100 points. I would call the response of the market to all of this scandal today pretty darn modest. It is in the volatility markets as well. The vix is barely moving itself. Were not seeing put up the vix here. Were not seeing a dramatic move on the upside here. Theyre at 14. Thats been there for a while. The major sectors moving today, well, a little bit on the risk, telecom up, i would say a mixed market. With most of the major sectors down less than 1 , i say were in a wait and see mood now. The markets were clearly oversold, excuse me, overbought on a shortterm basis, here is a little bit of an excuse, i wouldnt call this reaction particularly extreme or frightening in any way. Yes. Well see where the day takes us. Thanks a lot, bob. To Rick Santelli in chicago with a look at funding all of this growth, what there is of it in europe. If it was just about funding growth, europe should be fine. They have no growth. They really dont have a whole lot of funding. Ira, we just heard bob pisani, many believe that the problems in europe went away. And now theyre thinking, are they coming back . You and i believe that it really never went away, theyre trying to tread water and theyre taking on more weight and buoyancy, well, whats going to happen . Well, of course, it is never going away. What we know and everybody is using the euro as a proxy, the problem is going away. Look, draggy, who just got, you know, hosted as the savior of western capitalism of the most recent at davos, but he made a comment saying that the euro, as we talked about, there is no real concern about the strength of the euro because it is at its longterm average. Thats a direct quote. The last time that longterm average was here at 130, 135, the Unemployment Rate was 7 or 8 in europe. Now were up to 12 . Currency values mean different things. And the news we saw about the dutch bank that had to be rescued. The dutch were supposed to be the beacon. Correct. The news out of europe, thursday and friday, was really not good. And then we saw the news out of spain, which is not going away, because what we saw was the nonperforming loans of three major banks in spain ratcheted up quite a bit. Now, thats missing the old one bank has 11. 5 nonperforming loans. This is an environment of low Interest Rates. Very low Interest Rates. The high Unemployment Rate is continuing to haunt and anybody who thinks just because the euro is rallying in this environment for last year, that it is all over, i it is not all over. Lets say youre one of these kind of end of the world investors and youre really hunkered down in gold. What is the trade if there is one of two different ways. Either it is going to be japaneselike, and these major developed economies are just going to putter along, or there is going to be an issue that complacency makes investors avoid where things are turned down in a more dramatic fashion. What is an investor to do with his money considering europe will not be better in the long run . We have seen the push into equities and rightfully so. It is best return. Bonds offer you nothing. The risk reward as a trader to be in bonds doesnt make it worthwhile. Much better off being in equities, pays more and i have some upside. And dividends. Right. There is a whole lot there and now that we have got some of the smoke to clear off the fiscal cliff that we all wore bride ri. People come out and talk, well, the market expensive, not expensive, 14 times earnings, i laugh, because what does 14 times earnings mean in a zero Interest Rate environment . How do we value it means when the low Interest Rates managed or combination of managed and real world weak economics, when that game ends, we all hope it does, there is going to be a digital increase in Interest Rates and trying to discount some of the weak earnings, all the metrics will change quickly. Change dramatically, right. Carl, back to you. Love the beard, ira. Thanks, guys. After the break, a check in on the bank trade after booking gains in 2013. Is there still more room to run for the major financials or is todays pullback the start of something more. The president looking to close tax loopholes. Well go to washington for details on that. Tune in wednesday right around now, 11 30 a. M. Eastern time, cnbc exclusive interview with jcpenney ceo ron johnson, the oneyear anniversary of the retailers transformation. How do traders using Technical Analysis streamline their process . At fidelity, we do it by merging two tools into one. Combining your customized charts with leadingedge analysis tools from recognia so you can quickly spot key trends and possible entry and exit points. We like this idea so much that weve applied for a patent. Im colin beck of fidelity investments. Our integrated Technical Analysis is one more innovative reason serious investors are choosing fidelity. Now get 200 free trades when you open an account. 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 how do you keep an older car running like new . You ask a ford customer. When they tell you that you need your oil changed you got to bring it in. If your tires need to be rotated, you have to get that done as well. Jackie, tell me why somebody should bring theyre car here to the ford dealership for service instead of any one of those other places out there. They are going to take care of my car because this is where it came from. Price is right no problem, they make you feel like youre a family. Get a Synthetic Blend Oil change, tire rotation and much more, 29. 95 after 10. 00 rebate. If you take care of your car your car will take care of you. More likes. More tweets. So, beginning today, my son brock and his whole team will be our new senior social media strategists. Any questions . Since we make radiator valves wouldnt it be better if we just let fedex help us to expand to new markets . Hmm gotta admit thats better than a few likes. I dont have the door code. Whos that . He won a contest online to be ceo for the day. How am i supposed to run a business here without an office . [ male announcer ] fast, reliable deliveries worldwide. Fedex. Coming up, pullback or push higher . Were trading where the dow could head next after hitting 14,000. Is the gold era over . Someone on our show says yes. And hell tell you why. And which ceos are making some of the best timed insider bets . Theyre names you know and were going to reveal them at the top of the hour. See you soon. Scott, see you in a few minutes. Financials under pressure today after a nice run in january. Lets look at how you might play the banks. Anthony pallini at raymond james. Good morning. Good morning. Is january does it appear to be trend as well as some of the stocks have moved . Well, you know, we put out the Capital Markets report this morning for january. The results are okay. Theyre solid. Certainly year over year basis, you know, some of the things are starting to, kind of flatten out. If you look at traditional banking, you know, the head winds are still there. And then you guys have been talking a lot about europe. Europe is still a big risk. Yeah. You say youre cautious on some of the bulge names in part because of the eu risk is higher in those. How serious do you take a day like today on that front . Well, our biggest concern really is the continued unstable nature of greece. I think spain and italy will be fine as long as greece doesnt create a chain reaction, which i think it will. And im still very concerned about what is going on there. But as you guys pointed out, you know, you came into early 10, early 11, early 12 and felt good, trends were good and the eu kind of put the kibosh on ceo confidence and Capital Markets activity. Im concerned about that. You seem less worried. Were more worried about the u. S. Economy. I think what were seeing now in the marketplace makes sense. We had the megabanks lead the rally late last year. We recently have switched to the regional banks outperforming the megabanks and now were getting that normal consolidation period which is to be expected. Look at the tenyear treasury yield, thats what we say. If above ten for First Quarter above 2 for First Quarter, then earnings estimates will probably go higher. When you look at who beat this quarter, about 55 of the banks beat versus about 65 last quarter, but the downward revisions were much less and thats because we had a nice rally on the long end of the yield curve. Yeah. If were above ten, we have other things to worry about, i guess. David, the things that appeared to go well in the last quarterly reports, things like fick, was that seasonal . Fixed income will be stronger in the second and Third Quarter more than the first. The inflexion points are the Capital Market side. M a is looking great so far. And even equity even the equity side on the underwriting side is looking better. The trading side is still weak. If we continue to get some good inflows as we have seen in january, we could finally be at the big inflexion point in the bond asset class versus equities, which would be a big deal. A couple of your favorite names, david . Well, we like, you know, im Capital Market centric. And we like the small midcap names like evercore, lazard, green hill. As i said earlier, anthony, you like the big guys. I wonder in terms of, a, your favorite names and do you think we have moved on from the costcutting watch . In other words, will comp and head count be as big of a concern once we get the next quarter . I think cost cutting will be a big concern for the industry. I think it will be a big positive. But i think the ability of costcutting efforts to drive higher stock prices has probably lost some momentum. We need upward earnings revisions. Our top picks now are citi, and bank of america. As a defensive play we Like New York Community bancorp. But the bottom line with the companies, they wont get much higher in stock price unless we have a rally or a pickup in the earnings outlook. Last year we rallied with earnings coming down. Right. Question is does the economy allow the stocks to run along . Anthony, david, guys, appreciate your time so much. Thanks again. Thank you. When we come back, the president says hes wants to close tax loopholes in the budget deal. Which ones could be in jeopardy . Live to washington for the details on that next. President obama saying the u. S. Can reduce its budget deficit. John harwood has more. The big question in washington is what is the next budget deal to reduce the deficit going to be . What is going to be in it . Will it be spending cuts or revenue . The president said in the super bowl interview with scott pelley yesterday that it has to include revenue and singled out one in particular, that is the carried interest loophole. I dont think the issue right now is raising rates. There is no doubt we need additional revenue coupled with smart spending reductions, in order to bring down our deficit. And we can do it in a gradual way so it doesnt have a huge impact. The average person doesnt have access to carried Interest Income where they end up paying a much lower rate on billions of dollars that they have earned. Now, going into the president s favor as he tries to go after this is a widespread belief on wall street, even that this is an unjustified loophole, one of the top figures on wall street told me the other day it is an outrageous and indefensible loophole. On the other hand, you have a general republican resistance to more tax revenue and some specific democratic resistance, even, from people like Chuck Schumer in new york to actually getting this done. Were going to have to see, carl, over the next couple of months as we approach the sequester deadline and the cr deadline, both of those are occurring in march, whether or not in fact the president can get revenue and this kind of revenue. Got a couple of weeks off from that discussion, but going to come around soon, john, thank you very much. Keep the tweets coming. It was lights out at the super bowl last night. As you know, the power out for more than half an hour during the Third Quarter. Were asking besides the ad buyers and the ad sellers and the 49ers, who really benefited the most from 34 minutes of darkness . Tweet us squawkstreet. L statioo mission a for a final go. This is for real this time. Step seven point two one two. Verify and lock. Command is locked. Five seconds. Three, two, one. Standing by for capture. The most Innovative Software on the planet. Dragon is captured. Is connecting todays leading companies to places beyond it. Siemens. Answers. All your important legal matters in just minutes. Protect your family. And launch your dreams. At legalzoom. Com we put the law on your side. And launch your dreams. If your a man with low testosterone, you should know that axiron is here. The only underarm treatment for low t. Thats right, the one you apply to the underarm. Axiron is not for use in women or anyone younger than 18. Axiron can transfer to others through direct contact. 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Maria sits down with the shows producers as they talk about the backstage drama that nearly stole the show. This must have been a tough thing to swallow. The New York Times writing, it is a national joke. They called it vulgar before they had ever seen it. Read a script, knew anything about it. Major disagreements with the shows original key create and director, julia tamor, which led to her departure and sparked a legal battle over royalties. We werent ready when we started our first preview. Technically we had no ending. The scenery didnt work. As youre talking, im thinking the show spent 35