we also have a packed agenda today. 8:30 eastern time. june cpi. economists are looking for the headline number to rise by .4. among other reports to watch today, industrial production. that's up at 9:15 a.m. the nationality association of home builders survey at 10:00 a.m. our market newsmaker of the morning, squawk master mohamed el erian will join us. we have a lot to talk to him about. beyond the data, the other big economic story of the week, fed chairman ben bernanke heading to capitol hill. he'll testify before the house financial services committee. that's at 10:00 eastern tomorrow. then repeating that performance in front of the senate banking committee on thursday. a lot to chew on there. politicians are expected to grill him about the fed's bond buying program and plans for tapering and, of course, if widespread rumors that bernanke will step down in january true, this could be his last monetary policy report to congress. >> i bet he would miss that. >> we should also note that tomorrow say huge day at cnbc. in addition to the testimony, we'll be holding our delivering alpha conference. you can catch it all day on tv and online. "squawk box" will be live at the event. we'll be starting at 6:00 a.m. eastern time tomorrow. among our guests, famed short seller jim chanos joining us. along with david mccormick, and then at 8:30 eastern time, treasury secretary jack lew. not a bad day. you're all coming across -- >> yes, we're coming to your home. >> is it safe? >> it is safe. >> should we -- >> you should come over after the -- >> you know how you jones to wear the jacket. want to do it tomorrow? i'll wear a jacket tomorrow. if you want me to wear a jacket with pierre and audience and all that stuff. if you want, you know, get it out of your system, we'll do it tomorrow. >> i wonder what bernanke -- i don't know what he's been thinking lately because he hasn't said anything. i think tomorrow -- what are we on? she loves me, she loves me not, she loves me, she loves me not, she loves me, she loves me not. i'm doing all the reasons. tomorrow, i think he says he will taper. >> i think that's what he's on. back to that. >> yeah. he's done each side. i don't remember the last one, i'm sure it is back to tapering. corporate news today, investigators are probing whether a fire on that boeing dreamliner in lon been last week, oh, oh, no. oh, no. was caused by -- that's a different -- >> a battery. >> a different battery. the battery of an emergency locater transmitter. the part was built by honeywell. honeywell says it joined the investigation, but declined to discuss details. it said it had no previous experience of difficulties with the transmitter. airlines continue to fly the boeing 787 as the investigation -- if it wasn't anywhere near the lithium batteries where the previous problems were, yeah, but the stock sold off at an all time high. >> the airline engineers are suggesting this honeywell battery, which has been indicated as a potential, may not be at either, but may have exacerbated the problem. may have been there was a fire and that that lithium ion battery potentially exploded later. a good story in the journal, the new york times and a great engineering website about all this stuff. >> what do we know about -- >> two things. brand-new plane, and it was being maintained at heathrow. so it is not exactly -- >> not ethiopian air per se. >> but the stock regained most of -- >> back to a high. yeah. regained almost everything they lost. the new york financial regulators reportedly examining whether to overturn insure r f & a, usually like the hotel -- >> one this london. >> or in new york too. i would say it like that, just to sound more important. for the annuity business of britain's ariefia, the journal says this is part of the crackdown on private equity and insurance deals. the new york regulator said he's concerned that private equity firms insurance ventures could place annuity holders at risk. and preparing to vote tomorrow, thursday, on michael dell's buyout proposal, now adding uncertainty on one of the company's biggest investors. t rowe price says it continues to believe the propose bideout does not reflect the value of dell and we do not intend to support the offer as put forward. we have been discussing carl icahn, new offer for dell. >> new day. >> one of the featured speakers tomorrow. t. rowe price doesn't like either deal. >> doesn't like either deal. >> bingo. >> talk about other technology news as well. a court has cited with yahoo! in a data collection case. this is victory for yahoo!. it could help the public learn more about the government's efforts to obtain data from internet users. the u.s. foreign intelligence surveillance court reviews government requests to spy on individuals. yesterday, it ruled that information should be made public about a 2008 case that ordered yahoo! to turn over customer data. the government sought the information under the national security agency's prism data governing program. users must pay full price for their smartphones, people are very used to getting that completely subsidized by signing a long-term deal with the carrier. this change will let the carrier cut back on the cost of s subsidizing devices if you agree to stick around and have a long-term contract. another story for you, first data, will be suspending 401(k) contributions to employees and replacing cash bonuses you with stock. the announcement was made to all 24,000 employees of the company yesterday. this payover haul takes effect on january 1st and will save the company $60 million in cash next year. at this point, first data matches 3.5% of employee contributions to 401(k) plans. under the new arrangement, those contributions will be suspended and employees will get stock instead. the employees have to hold on to that stock until 3 to 6 months after they have an ipo and then they can cash it out. the trial of fabrice tour is now under way in new york. on day one yesterday, his lawyers told the jury that he never misled anyone. an s.e.c. lawyer arguing that he deceived investors about toxic securities. >> tough to say. >> in a classic case of wall street greed. this is being cast as a financial crisis. >> the complaint has been this is the best the s.e.c. can do, you're not going to go after the high level guys, who actually walked off with lots and lots of money in their pockets that were -- >> this is it. you're going after a 20-year-old -- >> she's nice. toxic securities, not hard to say, but she helped you. you're very empathetic. he has no one when you're not -- >> you mean, you don't -- >> no. i go like this when he starts messing -- i even try to distract him. what a week. we had billy bush and maria menounos sitting in. we had -- we almost brought in that guy that said fns on his first -- he was scheduled to come in. if you didn't show up today, we were -- >> billy bush and maria menounos. that would have been good. >> that's all you're thinking of? that's a joke. >> i was out for that. >> you focus on your hall pass and your infatuation. that will not happen unless you can produce matt lauer for pi r pilar. i'm at a support level. 185. i think i look -- i know what you're saying. a lot of saggy skin. i need to -- >> that's not what i'm saying. >> that's kind of what you're saying. >> you look like you should not lose any more weight. your face looks really thin too. >> there is a lot of extra skin. >> that's not what i'm saying. it's paying off. >> if you weigh 140 pounds, you're in the shape of your life, but you're young. this will come to you. >> you're a handsome man. i'm just going to -- >> it is paying off. it is also the swimming and push-ups and everything else. >> it is easier in the summer. >> the jack lemon movie, he turned -- he can't handle getting older and he's like on a treadmill and crying and trying so hard and everything starts not working as well and taking longer and -- >> should take it as a compliment, the compliment that was offered. you look good. >> okay. thank you. >> you look tan, that's probably because of the white shirt too. >> i'm paddlingup stream as quickly as i can. >> it's working. >> cheating. anyway. enough about me. let's talk about me. enough of me talking about me. why don't you two talk about me? >> we were. we'll talk about washington for a moment. senate leaders -- >> you look good. >> everybody is looking good today. i'm not, but you guys are. >> it's good. >> democrats plan to bring up seven executive branch nominations today. they say if republicans filibuster any of them, they'll change the rules so that 51 senators rather than 60 will be in charge. they can end the debate and proceed to a vote. and that would be a shift in washington. also, the senate banking committee released a draft bill aimed at bolstering the finances of the federal housing administration. the fha faced mounting losses from mortgage defaults. fannie and freddie helping the bottom line on the treasury. back to you, joe. >> okay. i don't know what i think about that. what do you think about it? >> i think it is a bad idea. i think there is a reason both sides should have to work together. if you're in favor of it this time, you'll be opposed to it when your party takes over. >> 18 held up. total prior to this was 20. more held up -- >> more reasons, right. >> i wish they could find some way to -- >> they say republicans are threatening, if you do this, all the other -- we'll go even slower on the other stuff you want to do. i don't know how that's possible. >> if you take the nuclear option, that's a bad thing in washington. you won't find ways to compromise -- >> only on the appointments, mostly for the -- >> it is going to poison the well on everything that they're working on. >> the well is so thick with arsenic now there is no water left. >> doesn't mean add more arsenic. that's -- >> fun to watch, i guess, anyway, as we're not expecting anything ever good. at least watch the theatrics. let's check on the markets. what a run. becky, one thing i didn't mention to you, i made this point, you weren't around, all the people that said no, no, no, you got to wait until we get a little -- none of them said when we're down 6% they wanted 10%. no, no, no. not yet. the train is leaving the station. they're not on board again. >> you may have seen the lowest level this year. >> none of them told us -- they just -- i don't know. some of them need to go find another line of work, i think. regular people can do as well, just acting on their own. the futures this morning, i think they're up about 11. yesterday, managed to eek out a small gain. but, you know, from some of the previous sessions, nice gains. the -- >> oil, that's what's surprising. i wasn't paying real close attention for a week. holy cow. >> we need to get down to 50. >> no. >> the ten-year, quieted down, we couldn't have made it -- couldn't have done this eight-session streak or whatever it is. but if that hadn't happened. if we were at 290, it would mean a different arena. and then the dollar, which i keep saying that the european countries, by being so turbulent now to -- they have given the fed so much cover, because we have -- all this accommodation and our dollar stayed strong. we have been able to do all this, as the best house in a bad neighborhood and -- china is getting even worse. >> i think the biggest concern globally is china. >> and then gold has come back a little. back to 1286 or so. bounces along the bottom. nobody knows yet whether it starts -- goes back to 13 and tests that or 14 or whether it goes back down and head business low 1200. we'll see. time will tell. >> let's talk about global news. trains ground to a halt and hospitals worked with emergency staff. the strikers are protesting government plans to fire thousands of public sector employees, so, yes, the chaos continues. and once again, you see the protests. also in india, the central bank raising short-term bore rogue costs, restricted funds, banks said that they could -- restricted funds that bafrmgs could access and it says it would drain cash from the market via $2 billion bond sale. india is to create demand for the rupee. trying to create demand for the rupee, which hit a record low last week. that move sent stock and bond prices tumbling today. you can see the rupee at that point at around 59. now time for the global markets report. ross westgate is standing by in london. good morning. >> good morning to you. we're getting back toward the best levels of the day. equities under water for most of the session in europe. advancers outpaced by decliners 3-2. a bit of data out today, which played into that slightly better inflation data than we might expect out of the uk. mark carney, the governor, doesn't have to writer a letter to the chancellor. the annual rate came in at 2.9, a tick up in june from may. people think that will be the peak. boosted by a rise in petrol prices. ftse 100, we are outperforming, just up 3 points. helping is rio tinto, one of the world's second biggest copper miner, iron ore miner. had record iron ore output in first half of the second quarter, up 7%. rio tinto up 2.7%. contrast the impact of rio with the cac down a third, xetra dax down a quarter as well, with the sectors, basic miners, basic resources that are higher across the board. best performer, 1.2%. helping miners out, the australian prime minister saying he plans to scrap a carbon tax. controversial carbon tax introduced last year. he will have to win the election before he does that. that's all pretty good news for miners despite the volatility in iron ore prices and copper prices, the production is up and it is working okay. media, travel and leisure. as we stand on equities, as far as the other data is concerned, disappointing investor sentiment survey data out of germany. it did just mean we got -- bounds got a kick earlier on. economic sentiment, 36.3. expected a tick up to 39.6 in june from may. basically some of the german data hasn't been quite as good. elsewhere, gilts lower yield because of the inflation data. we keep our eyes on spain as well. yields still elevated 4.7%. spanish prime minister getting a lot of heat about what he knew or didn't know surrounding his party's slush fund scandal. keep your eyes on that. it might blow up after the german elections in september. that's where we stand ahead of the u.s. open. back to you guys. ahead of the u.s. open. i'm thinking british open. that's -- what's today, ross? tuesday. >> we kick off on thursday morning. >> have you seen a forecast? not over there -- it is always raining, right? >> no, the weather -- we are in a mini heat wave. we haven't had a heat wave like this since 1976 and it is even extended, believe it or not, up to the northern part of the country. scotland having really good weather. hopefully the course will be fairly fast running. hard and fast running, the way we like links golf. >> so fun, i know. you got to land it 20 yards in front of -- i can't even tell where the greens start over. there is no fringe -- >> it is original. original landscaping. they didn't make the courses with bulldozers. >> the bunkers look like a lot of them like you're in the middle of a construction site. they don't look planned, half of them. is that really -- in -- >> i think on the old golf courses the bunkers were literally because it was links golf, it was sandy soil, they didn't have to -- they made a bunker by scraping away the top part of the earth and there was the sand at the bottom of it. they -- they were easy to create. >> a lot of things in england, they think because it is old, it is better. like their food, for example. there have been advances made in food technology too, ross. you don't are to eat that -- >> you know london is one of the culinary capitals of the world. we have moved up. >> you loved it when you were there. >> i do. i like the white tower. you have an amusement park basically that is real. built in the 12th century or something by william -- and it is like you're at like in -- over here, we built it like 15 years ago to make it look old. but you go to the tower of london it was all -- and there is like on a thames there is this place where you can see some of the guys coming in bringingbring ing prisoners in, right, ross? >> they cleaned up all this stuff. the new resorts look so good, you think it looks like it has been built recently because of the -- modern resorts are so well done, replicas, that you think -- >> right. and it's neat. all of it is neat. i'm coming back. now i -- >> due a trip. >> we hung out. >> i know. >> we had dessert together, which is weird. not just us. not just -- family, the kids, all okay. see you later. coming up, one year ago, marissa mayer, do you like mayer or mayer? you said both. >> i say both. depending on my mood. >> took over ceo of yahoo!. set to report results today. we'll talk about the future of the company next. up first, tonight is major league baseball's all-star game in new york. last night, i wish i followed baseball a little closer. i guess i don't know the oakland a's that well. this guy that you can see there, that andrew will pronounce after the break, be yoenis cepedes, left out of the all-star game to take home the crown. winning the home run derby, that will get you a cup of coffee. >> like winning the dunk contest and not being in the real thing. >> he beat bryce harper 9-8 in the final round. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world. in fact, we've invested over $55 billion here in the last five years - making bp america's largest energy investor. our commitment has never been stronger. welcome back. national cancer institute scientists released the largest ever database of cancer related genetic variations. the move provides researchers with the most comprehensive way to date to figure out how to target treatments for the disease based on your own genotype. open access to the new database is expected to help researchers accelerate development of new drugs, better match patients with therapies, different side effect profills, different efficacy, prime example is herceptin which works incredibly well depending if you have that one particular genetic anomaly. >> i read something today, a new study out that just suggested even mild exercise, if you can get one to two times a week, can help prevent even more than any of these drugs that they're bringing on. >> i would tell you that -- your immune system is -- i don't know if you call it an organ necessarily, but if you're in good shape and you pay attention, you -- the germs that you're always worried about that are everywhere, they ned to be -- if you haven't gotten sleep, or rundown, they get to take hold. >> under stress. >> but running and everything else, i don't -- >> exercise not only changes and helps get rid of the fat, it changes the way the fat you have acts and where it goes in your body. that's a big part of it too. they're saying, again, exercise is the best -- >> mentally. >> sleep is something we all kind of -- >> the endorphin thing is huge too. keep your attitude positive. >> i think -- tim ferris suggested taking lieseen, given to cats, actually, to improve your immune system, to, you know, it is supposed to be -- if you feel colds coming on. i take that. it has garlic and -- >> it is an amino acid. one or 20 or -- with what you eat, if you eat a normal diet, you get plenty of lieseen. >> if you think a cold is coming on, you're supposed to take it. >> that's like a lot of the things we have seen. >> ever seen vitamin b -- >> i take one vitamin. >> airborne. >> one multivitamin a day. you know what i saw the other day, ensure, it is like, look at this, like 25 grams of protein and you said, that's for -- >> i don't think you need it. same thing. >> it looked look a good drink. but it is for people that are 80. >> they're trying to market for people much younger. it does a little dance in the refrigerator with the other food, like, yea, you're the healthiest. >> i'm not quite there yet. >> no, you're not. let's get a check on the forecast from alex wallace. how are things shaping up today? >> hot. h-o-t. not just today. something we're dealing with for the next several. get ready and be prepared for it. d.c., baltimore, heat advisories. head toward phillie, excessive heat warning today. we're talking about the heightened heat advisory there. parts of new england. hartford and new york city, heat advisories for folks here. all thanks to this big ridge of high pressure sitting over us in the northeast. it extends all the way back to the midwest. not just the northeast dealing with the heat. places like detroit, chicago, minneapolis will see the 90s. look at the widespread activity. these are the actual high temperatures, 97 in philly. you start talking about the humidity that makes it feel nasty out there. 97 plus the humidity, going to feel like it is up over 100 degrees out there. this carries na tomorrow as well. 93 in nyc with dc up to 96 degrees. really stay cool, ac, drink water, if you're out there. stay away from the strenuous activity. guys backing to you. >> thank you, thank you. it is hot. way too hot. yahoo! gearing up for a report, quarterly report results after the bell. we'll see how hot they are. been a year since 38-year-old marissa mayer took over as ceo. joining us to talk about it, ron josie. what should we be looking for today? >> i think it will be an interesting quarter because yahoo! was active on the engagement front. launched a brand-new products, new home page, new search, new e-mail. we need to be looking for an increase in engagement, which in theory should turn into increase in display dollars. maybe not this quarter, but hopefully in the back half of the year. that's got to be key. >> that are we going to learn about this billion dollar tumblr deal today? >> i got to believe not much. probably will learn how they plan to monetize it more. they're not going to be integrating it within yahoo!'s core services too much. don't want to ruin the special sauce within sum bletumblr. still relatively early. >> when you think of the total value of yahoo! so much of the total value is in alibaba and their stake there and whether you think there will be an ipo this fall or next spring. do you think we'll learn about that? what percentage of the total value of yahoo! do you ascribe to the alibaba piece? >> it is a very large percentage of the total. valuation range goes from 50 to 100 million with most people at 70. in our opinion, you know, i think this is a big part of the overall yahoo! story. it certainly is a big percentage of yahoo!'s total overall valuation. that's why when we think about operations and the way we think about yahoo! we're focused more on operational turn around. ali a big focus. >> what is yahoo! going to become if it all works out? is it ever going to go back to the status and stature it used to have? >> that's a tough one. i think where the web is going, certainly search is probably the purest business model and they have a big business. the web is going more social. yahoo! is trying to do this with a bunch of acquisitions we have seen this year. to be in a traditional portal business is something that needs to sort of change a little bit. you see this with new ceo mayer focused on daily habits. more on mobile. that's something we need to see. not easy, clearly. we have seen that yahoo! is treading water for the past few years. >> how long does the honeymoon last? this has been a year now. i could argue that the numbers are not necessarily there. there is a little bit of wait and see. >> it is a lot of wait and see. and frankly, you know, yahoo! needs to return to maybe its peak of 2005. in terms of the leash that ceo mayer has, i think you have a few more quarters here. as you said, andrew, nail on the head. >> if you had a dollar to invest, stocks at 27.50, would you invest in yahoo! google, apple, where would yahoo! be on your lineup in terms of great investments out there? >> sure. i would throw another one out there, ebay, which reports tomorrow. we like ebay quite a bit. we would put a dollar on ebay and google as well, probably over yahoo! at this point. >> where would aol stand? >> we like aol too. we think aol is further down in the overall turn around cycle. there is a lot of question marks in terms of whether they can grow both top line and bottom line. we would put a dollar in aol before yahoo! at this point. >> thank you for your perspective this morning. >> thank you. >> yahoo! reporting this afternoon. if you want to play armchair critic or armchair analyst here, you can go see our poll, tell us whether it will meet, beat or miss, go to facebook.com/squawkbox. when we come back, quarterly results from goldman, coke and johnson and johnson. all on tap today. a key read on inflation, we have the stories likely to drive today's trading session. first, look at yesterday's winners and losers. 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(announcer) scottrade. awarded five-stars from smartmoney magazine. welcome back. another all time high for the dow and the s&p 500. now the markets deal with a flood of earnings and another round of fed speak from ben bernanke which kicks off tomorrow. joining us now is john stolfus. and cliff courso. cliff, we'll start things off with you this morning. what are you thinking at this point? we were commenting earlier. if you were waiting for the pullback, you never got it. are you going to get your chance this year or have we seen the lows for the market already? >> i think the temper tantrum may be the wrong reaction. a little surprise. it shouldn't be to the market, caused the pullback. i wonder if it is now built in, like sequestration was built in. maybe we have done enough dispersement of what is about to happen by way of taper, that when the event actually happens, it is maybe a big yawn. >> if that's the case. perhaps we have seen the lows for the year. >> it is a possibility. if you take a step back what is going on is the economy is improving. we like to say good news is good news, particularly for the stock market. again, the economy is recovering. we see it in the consumer sector, the balance sheets are improving. jobs are still a little too slow, but growing. we're constructive on the stock market for sure. >> we'll come back to the bond market for sure. let's get your thoughts on the bond market. >> i would have to say that when you look at the stock market, it is experiencing the beginning of i great migration back to equities. with the likelihood that bond yields are going to rise, but that will be a moderate rise. we think people are going to be looking for cyclical stocks, dividend exposure with that, total return story. and that's going to be very supportive going forward. what does a baby boomer need? income, income growth, potential for capital appreciation. and the environment appears good. looks like we blew out all the tension related to the tapering issue. i think ben bernanke learned perhaps next time it would be better if he tweeted the message than if he gave a lot of detail. overall we're very positive and exposed. >> how do you think the market reacts tomorrow to bernanke. more of the same? have we become ready for anything he has to say at this point? >> that's the $25 trillion question, becky. it depends how mr. bere hannank feeling. the fed chair is a straightforward guy. when he checks out the latest beige book and read on the economy, he'll tell it like it is. and the market will respond in kind. but we have to say the overall trend here looks positive for the u.s. economy. as we lead the world out of the great recession. >> cliff, back to the bond market. i saw pimco actually added to treasuries, treasury holdings in the month of june. is that the right move? >> we think the right move is to underweight treasuries. overweight yield product because we think rates will continue to rise. we don't think it will be a blowout, don't think it will be a massacre like 1994. the fed is not trying to slow the economy down. a big difference. they're trying to moon walk out perhaps of this amazing experiment. money supply growing by 350%. not trying to slow the economy down. the rates will continue to loft. but i view it in two regimes. the first regime, we just hit, here we go, tapering, but that's not the same as raising rates. if you look at what bernanke is pointing to, we're a ways away from the number. the actual rate rise probably doesn't happen until 2015. we as a market, given the lengths of time we look at investing, probably won't worry about that for six months. you'll have a six-month plus period of stability in the bond market, maybe a 2.5 to 3% ten year. there are things you can do. >> okay. cliff, thank you very much for coming in. john, thank you for join is us. >> thank you. what happens when you combine reality, a tv star, a love for underwear, and a pitch for to kick starter? >> what? >> yeah. yeah. i wonder if we'll look at this underwear and see if it can compete. we'll have to try them out. maybe not today. tomorrow, "squawk box" is live from cnbc's delivering alpha confidence. we'll be joined by jim chanos and david mccormick. at 8:30 eastern, secretary jack lew, treasury secretary jack lew. don't miss it. -f-f-f-f-f. lac-lac-lac. he's an actor who's known for his voice. but his accident took that away. thankfully, he's got aflac. they're gonna give him cash to help pay his bills so he can just focus on getting better. we're taking it one day at a time. one day at a time. [ male announcer ] see how the duck's lessons are going at aflac.com ever ybody has different investment objectives, ever ideas, goals, appetite for risk. you can't say 'one size fits all'. it doesn't. that's crazy. we're all totally different. ishares core. etf building blocks for your personalized portfolio. find out why 9 out of 10 large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. how one man got so fed up with the poor quality of men's underwear in this country, he decided to make his own. and in the process, he created a high end garment company on track to being a multimillion dollar lifestyle brand. joining us is jake byronsteen, ceo of flint intinder. it looks like good stuff there. >> yeah, we -- >> but it is about being made here. >> it is. >> starts with manufacturing in america. >> it does. i've been walking through the underwear aisle, a multibillion dollar section of a department store -- >> the men's. you're not one of those -- >> just the men's. and what i in the enoticed is n single product was manufactured in this country. if you look at the unit economics of that space, it is a category actually created using american manufacturing decades ago. so to slide in an american manufacturing base, you can do it at the same price point, you can deliver higher value, and create some american -- >> someone said to you, if you want to try to make underwear in the u.s., you have to go back to flind -- what is that, like the stone ages? is that what they meant? >> if you wanted to reignite american manufacturing, you need to use flint and tinder. i thought that was poor business advice but a great name. >> is it a boxer or a brief? >> like half and half. >> boxer briefs. >> you got both. >> the cost of doing this in the united states -- >> the cost itself is five times. so on that end, it is not competitive at all. >> how much do these boxer briefs that i'm holding -- >> they would retail for $21 on a shotore shelf. >> and cost you how much here. >> the margins are slimmer. they're going to go dollar to thar against ralph lauren on the shelf, against calvin klein. >> china, where is it being made? >> china, thailand. >> is that licensed to somebody else. >> it is licensed. everything in the underwear aisle is owned by one of two companies. it makes it hard to push in. when we started online, which we did 12 months ago, pe put twe p project up and skied does anybody else care about this the way i do. my goal was to sell 3,000 pairs of underwear as a proof point to take to investors. >> like kick starter. >> we did 300 grand -- >> did you have anyone to make -- you had to scramble with someone to make all that. >> it is on par with anything elsewhere in the world, it is a vertically integrated facility. we're now 11 facilities. we're on track to doing 2.5 million this year. we have done over a million dollars in a single sweatshirt already. and i really think it is on to something. i think we can build ralph lauren level brand using an american manufacturing base. >> do you have to rely on people agreeing to paying more for it or -- >> no, the end consumer doesn't pay a dollar more. as a company, we take a reduced margin, but we can make up for it through online sales. so -- >> okay, where margins are not going through. >> right. the underwear goes on shelves, which is great. dollar for dollar it compares to every other product on shelves. online we can offer other products, jeans, sweatshirts, t-shirts, this kind of stuff at what would appear to be a value, we're about to start selling jeans $160 in j. crew, $80 on line, and recover the rest of the ecosystem. >> what sizes? what are those? >> these here are -- we call them our all summer board shorts. they look like shorts, they function like a bathing suit, so you can wear them all summer . >> do you have a nametag on the back there or what? . >> is this a baby suit you can wear? . >> you can wear one item all summer long. >> how much do these cost? . >> those retail for $358 on the website. i know for a fact if it doesn't come in a tube, he's not going to wear underwear. >> you don't wear those panties that come in a tube, honestly? you wear something out of a box? . >> yes. >> so even the box looks different than everything else in the underwear aisle. it's not a guy with his shirt off. >> it comes in a tube. will you try this honestly? >> i know are you a tommy john guy. they're made in thailand, the male equivalent of spanx. will you you try an american product? . >> i will try that. i got them from a woman. >> lulu lemon? . >> she had to send me instructions there is no flap. you do need to pull down. >> you love flap, right? . >> can i tell you something? i don't think lulu lemon makes underwear. >> these were shorts that had underwear in them. >> no, no, i got, they do have the flaps. they have a thing. >> all right. >> i don't know what you are wearing. i'll be happy to talk to you about it after we're done. >> some men don't like the ripped dude on it. it's really designed for -- >> i think that's sort of, right in. >> i think it's aspiration. >> it might know aspirational as we move from a float-sexual economy into something else. >> lulu lemon. >> are you implying -- >> i don't know what i'm implying. >> is that a fantasy of yours? . >> know your competitor. >> yeah, okay. >> lululemon, they really like being an apparel manufacturer who touch on underwear. they're not and underwear per se manufacturer. >> we will be delivering alpha. >> i like american made. thank you very much. >> we will do what we can. >> still to come on "squawk box" this morning. quarterly results from goldman and squawk market master. stay tuned. "squawk box" will be right back. . >> i will be interviewing nelson peltz. you want to know the way he thinks about investment and activism and take joseph's. we will try to physical out where he's going next. >> peltz, lew, isaun, ferrara and more t. biggest event of the year. delivering alpha, exclusive coverage all day tomorrow on cnbc. . . >> welcome back to "squawk". >> coca-cola, johnson & johnson all due in the next hour. we are back in just a moment. . >> glorm, everybody. i'm becky quick. let's take a look at the markets around the globe starting right here in the united states with wall street's record run. the dow and the s&p finishing at new highs for the third straight session. investors will now turn their attention to earnings news and congressional testimony. the futures this morning are indicated slightly higher after the dow and the s&p eeked out those gains yesterday. a gain of about 18 points yesterday for the dow. right now the dow futures indicated up by close to 10 points. goldman sachs is the next big financial firm to report earnings. they expect results to come in at $2.82 a share. navenlt, we expect those numbers in the next half hour. coke is expected to give her to shares for the second quarter. the dow component cfo will joins first at 7:50 eastern time to talk about those results. also, johnson & johnson will be out with near record highs. j & j is expected to report $1.39 a share. overseas, the nikkei hitting a seven-woke high, finishing marginally higher. you can see the gains that came out for the nikkei was just over .6 of a percent. if you check in on europe this morning, you will see right now at least there are some modest decarolinas. a drop of a quarter percentage points for germany, dax and a drop of close to half a percent for the kak in france. >> it's more of a summer bull run. it's j & j, all the dow components, now you know why. on the phone, index analyst at s & p. howard unlike the late '90s the multiples for these nifty the multiple bar is extended as they were back then. does that mean that maybe we will fail in value, not overpriced in. >> no, definitely the multiples are more realistic. which is reflecting that we done believe the futures as much as before t. cash flow numbers are a lot better than they were before. especially if we go back to 2006, 2007 with high multiples as well. the fundamental also of the index are very good, an balance eshoot and income statements. >> where do you as someone at s&p, where do you put the multiple right now on say the s&p 500 on this 84 or next year's earnings. >> they were at 14-and-a-half. i go into 2014, you will get a little low. not a lot of people believing those numbers yet. everything could have to be aligned for that to happen. the second quarter, now, even though we will complain about the number, especially the sales. it looks like it will hit an all time record. so it's hard to complain when you make a new record. the cash flow effect will be god as well. we haven't had a lot of major items pre-announced. >> so 14.5 historically is the -- >> yeah. >> that's what brings our figure even at 18. you had rates that weren't at 0, too, right? >> yeah. we haven't had those going being. so we should be going into the 90s or going back even farther when we had a low pes in the '70s and things. >> how high could rates go? how high could the ten-84 go where you could still, you know, if you were confident it maybe had adjusted enough. people all think the ten year is the yoeld is lower than it should be without the fed. let's say it cuts back to -- >> however. >> you got a speaker or a receiver on the phone? . >> i have got a receiver. >> fine. >> here's my question. if we got back to normalized rate on the ten year, could you expect 18 times earnings? . >> not at this point. you have to have a drag on the rates. what we need is a lot more confidence in the fall with numbers in the market to pay that multiple. the earnings are decent. the dividends are decent. the cash levels the balance sheets, they're all good numbers. however the competency going forward is not there yet. the cycle is only starting on the upside with consumers hopefully are spending a little more. maybe we can get more enterprise spending there. i.t. will be really difficult this quarter again because of the lack of corporate spendingch. >> okay. so, in this environment, are there different parts of the s&p that have more potential and are there parts that have more risk? . >> obviously, through the financials, which are the biggest contributor to earnings at this point, star on the rebound, especially if you look at the stock price, they're supposed to do the best. worry seeing that. you notice, we shaw the three big ones, we got bank of america tomorrow, i.t. is the big concern, obviously. if you want to go back to rates, obviously, the utilities are a big difficulty. the debt in the index side of banks and utilities is pretty low. we have been running the numbers, those who have refinanced have. it will be more on the utilities and obviously the financials for the interest rates. >> okay. all right, howard, thank you. sorry, i guess we couldn't get a camera or something. are you in the studio, right? >> i'm here. >> do you look, do you not look good today or something? why didn't we put you on camera? . >> you can only work with what you got. you know, actually the studio guy just came in. i guess they would wait a couple of minute on here. there is a phone on here. >> they didn't look at you and say you have to do a photo? . >> no, do i have a face made for radio and a voice for movies, no doubt about. i disagreement i disagree. a voice made for what? . >> the silent movies. >> oh. geeze. or something. all right. howard, we appreciate your time, thank thanks. >> in other news this morning, price will not support the boyout. brian rogers saying it doesn't properly reflect dell's value. investor. >> caller: acon has, of course, been pushing >> also the government has a case in which it ordered yahoo to turn over customer data. yahoo has won a fight to have the details about that case unsealed. those details could shed more light. the government will have a chance to review the case documents and read back classified information. all of this was done under that proven program that has seen so much in the headlines. >> the 787 soap opera continues. investigators are probeing whether a dreamliner in london was caused by a battery of an emergency locator transmitter. that's the good news, because it was not the larger battery issued. but it affected those planes earlier. the part was built by honeywell him honeywell says it has joined now in the investigation but emphasizes it has no previous experience difficulties with this type of transmitter, which by the way is on many planes and, of course, 787 continuing to fly be many of the other airlines that has this. >> i like when you do that here. >> anyway. you can see the shares there $105, $66 cents. >> pimco shares increase the holdings of treasury securities last month. according to data on pimco website, they fell in june, the worst month since the financial crisis in l.a. when it happened. investors powered 9.6 million in the fund. we will be talking with the co-ceo now. >> he's not co--ceo? that's a lot of responsibility. mohammed el-erian. he was named. >> you can see it on corners. >> he's got a good job. >> in this environment, given the bond market. >> compared to the president of egypt. >> well, it's relative. i don't think it pays as well either. depending on what kind of president you are. some of them have done pretty well, actually. you got to be dishonest, which he isn't. >> it's probably not. the servers. they don't have that. >> they have been tweeting. unfortunatel unfortunately. >> there were some tweets. you are very interested in underwear. >> oh, let's talk about an at&t story we mentioned. at&t is introduce agnew plan where customers can get a new smart phone or tablet every 84. most of the time you end up having to say you will keep it for a couple of years t. phone companies have been subsidizing the costs for the smart phones for several years doing this. under this new device plan, at&t next, customers don't have a downpayment, no upgrade fees. no activation fees. you can think of it as an installation plan. after 12 months of payments, people can trade in their device or keep it after 20 months of payment, then you own it. >> what happens if you have an iphone? how much does it cost that much more? you can get it for $300? $299 on at&t? . >> it costs double if you -- >> i don't know what the pricing plan works out. my guess is you are paying more on a monthly fee, can you swap it out after 12 months instead of 24. >> you want to hear some good news? . >> always good news. >> there was a theory t-rex. >> i tweeted this this morning. >> was a scavenger. they said the t-rex, is now they found a very unique fossil in south daekt where it was a 4 ton plant eater and they found one of t-rex's teeth in this thing's pa past. >> it's out there, the tooth is embedded there, which manet the t-rex was chasing it. >> they had showed calcification around it. >> it started to heal. it got away from the t-recollection which was chasing it. then it regrouped. >> he was right. >> do you crave -- >> do you know what size bites the t-rex could take in meat? a 500 pound bite. >> and lived to tell about it. >> thank god he doesn't have a -- you saw that? we will take a short break. coming up next, the markets are enjoying the easy money policy. will bernanke signal the end to the punch bowl party? we will speak to lawmakers tomorrow. coming up, one of wall street's biggest investment firms will be reporting the numbers and instant analysis you can only get here. wall street reaction just ahead. stick around. . . >> so the latest read on the futures there, after a pretty good session yesterday, just in consolidateing some of the big gains we had over the past week so for. some numbers are coming. we're all waiting to see what ben says tomorrow. which could be his last testimony. you are sure it will be the last? . >> i'm not sure it will be the last. the question is, will he be here six months from now? . >> if he extends his term. >> i don't think the term. maybe he sticks around a little bit. are they allowed to do that? . >> i don't know. >> you are saying this is the end? . >> yeah. that's what we said earlier. >> we said possibly the end. >> the end unless he gets another term. >> unless he gets another term. when do you think they announce another term? . >> they kind of did on charlie rose, didn't he? . >> who said that the other day? someone said long live the king and then in the next one. they say, whoever that might be, when we decide. you usually don't announce someone is gone. >> until they're gone. >> until someone new. >> let's talk more about that. joining us on set right now is nathan sheets. he is the global head of global economics at city and nathan, this has been something we have been kicking around this morning. do you think this will be his last testimony? . >> i think this is it. i think after this round of testimony, chairman bernanke is going to retire. it's been eight long grueling years. my feeling is since he will be kind to the stew wardship of the federal reserve. i think he is ready to move on and do other things. >> it depends on what happens over the next couple of years as they unwind this big policy that's been put up. you think he's okay not being in part of the legacy? . >> i'm sure that that generates misgifgs and uncertainty, but eight years of battle, i think he's tired. >> i can understand. >> i think he is also confident of the risk of possible successors. all of them are capable and able of the federal reserve and really lickly to succeed in exiting from these policies when the time comes. >> he has done a lot to try and make the fed a place where there is a much easier game plan. it's less about who is in charge of things, more about the procedures that are followed by whoever is in place. would you agree with that? . >> i very much agree. i think that was his key objectives when he joined the federal reserve. first as a governor, then when he became the chairman. i think that's really what the communication is about is trying to help the markets and the public better understand what the federal reserve is doing. and in terms since then, that he mystifies it and makes it less about a single individual and more about the institution, the process he used for monetary policy. >> the markets are very prone to react in a huge way to whatever he has to say or whatever he doesn't have to say. whatever it thinks the subcontext is there. some people have said you can't take the mystery out of it. you have to give away your changing stance. no matter what will rule the markets. >> inevitably the chairman is the voice in the face of the federal reserve and inevitably, the markets have responded to that. i think you can go a certain way to demistification. i think bernanke has gone about as far as anyone will going to be able to go. but the chaerm is the leader of the committee and his voice matters more. than the other members. the markets realize that, respond accordingly. >> tomorrow, do you think the markets have been as much as they will be over the last few weeks? is there anything he could say or indicate that the markets would see as a huge surprise? . >> i believe bernanke is very pleased with the way the markets responded to his q & a last week. i think he's happy with the level of the ten-year treasury. i think he struck the right balance on the communication. on the one hand, the economy is doing better. if the economy does better. we will not be able to purchase at 85 a month forever. on the other hand, we are watching, we will monitor anything we do will depend on what the data say going forward. i think you strike the balance right. i think he's happy with what he's communicated twice. i think the testimony tomorrow and on thursday is largely going to be restating what he said last week. >> do you think what he said over the past few months has changed at all? . >> honestly, i think what's changed is the economy appears and particularly the labor market. because the gdp data went a little flimsy on us right now t. labor market feels stronger. i think the fed is more confident and optimistic about the economy. i don't think the fed's so-called reaction function has shifted. but i think it's interpretation of what's going on in the economy has shifted. >> before he said we might go higher. >> he had said we're at 85. we may go up. we may go down. >> i know you ask that question all the time t. time before, he had said, we may still go up from 85. on may 22nd, he said, we're going down. >> yes. >> that was different. >> there was a time we had the very weak march payrolls. we got in early april and then the march data, they were coming out with were very weak. >> the first week was 100. the march data were very -- >> it changed when he said it's data dependent. that's why we should have assumed it was data dependent. >> we can't be at 85 billion forever. >> that's what we have to keep in meevend when we think about federal reserve policy. is the staple. they had a team of hundreds and hundreds of economists. they are analyzing every data point from every conceivable perspective. and anything they do is going to be justified based on data. they are looking at what the economy is doing. and they're trying to respond to the economy performances as best they can. nothing is precooked. >> bernanke, you know you have to do that again tomorrow. >> don't rock the boat. for hours, he's got to talk about it again and say it in different ways but not say it wrong, not say neng anything new. you wonder why he wants to leave. >> nathan, thank you very much. >> my pleasure. thank you. >> coming up, earnings from goldman sachs, johnson & johnson, the cfo will be joining us first here on cnbc to talk about the global economy and much, much more. "squawk box" returns right after this. . . >> coming up next. we got goldman sachs, coke, johnson & johnson. we have the numbers. stick around, a lot more coming up [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. >>. >> coal bam back to "squawk box" this morning. in the headlines, we are an hour away from consumer inflation, the consumer price index is expected to rise .4 following a .1 of an increase in may. we have earnings news. becky, joe. >> numbers. >> yeah. >> it's in line. >> it's in line with expectation, 1% global buy on growth in the quarter. >> if that's the case that, is below the 2.3 is the estimate. >> currency was a 2% head wind on comp, operating revenue 12.75. 12.958 was the estimate. so that would be a little bit light on the revenue side as well. >> the street was looking for a gain. it looks like they have a drop. here comes the actual report, itself. according to some of the other number, latin america, they were looking for a gain of 5.3%. so the case volume in latin america was actually at 2%. >> you see this, they believe the performance will be better in the sec half of the year. >> coke at this point. >> 1% in pre-market. >> 43 is the high on coke. i think it finally did get back. it took forever. it got back to where it was in the late 90s, i believe, finally after all those years. gives us a split at some point. >> someone told me goldman sachs was out. although, i don't have the numbers. do you see them? . >> i do not believe goldman is out yet. >> it will be. when we get those numbers, we will bring them to you. in the meantime, we come back to coke. we are about an hour away from consumer inflation t. june consumer price index expected to rejs stare rise of .4 of a percent. later this morning. the fed issueing its monthly report on industrial production is back to capacity utilization. we will be getting the monthly reading for the national association of home builders. also, we got a little of a deal this morning. china is buying smart phone apps 91 wireless. they operate two distribution platforms that delivered more than 10 million apps. china's largest search engine. there it is the equivalent of google on steroids. joe, we see anything else? . >> let me tell you more about these numbers. currency was an issue. it was a 2% head wind and a 3% head wind on the comparable operating income for the quarter. some comments from the chairman and chief executive officer. he said our second quarter volume came in below our own expectation, reflecting a global challenge in the environment and unusually poor weather conditions in the quarter. he said they're not happy with the performance, but they did gain global volume and value share in total non-alcoholic ready to drink beforeages and in the quarter. the head winds, they're committed to improving results with current dynamics leading up to believe our performance will be better in the second half. >> challenging global macroenvironment. >> the weather. it's actually poor weather. i don't know what that means. >> rain. >> euro-asia and africa was good. it matched expectations. that's why the zbroet. 9%. they acknowledge the rest of the volume the case volume around the world is below their own. >> it's interesting data. here it is, despite unseasonably cold and weather, cold and wet, people don't drink as much soda. >> what's amazing is we're hearing cold and we don't believe it because our own little world it's been hot. so where is the cold and wet, you know what i mean? . >> somewhere. maybe latin america. >> one of the coldest on record. you don't think that way. >> it's all local. >> it's all local. >> it's interesting. we were talking about the numbers where they saw stronger growth. thailand up 24%. nigeria up 15%. russia up 11%. argentina up 7%. >> i think that coke might be number two. >> and pepsi sometime. >> i have been drink a little frese ka late -- fresca. it's a throwback. >> you know what i had last week, tab. i haven't seen that. i didn't know they still made it. >> it's a coke product. >> all right. now, we do have goldman. so i want to, before we go, we see the stock is immediately up 2 points on the results. so you would have to say they have a chart. you see it right there. >> revenue came in better than expected. $8.6 billion t. street was looking at $8.9. second quarter earnings per share 3.70. well below what was expected. they talk about investment banking revenue of 1.55 billion and just starting to dig through the rest of it right now. >> you can find what you are looking for? . >> the inflation benefits loin? you actually really want to know? . >> it's not -- >> 27% higher than the second quarter of 2012. it's a significant increase in revenue. for the first half of 2013, with 43%. 44% in the first half of 2012. a total staff decrease 1% as dpard with the end of the first quarter of 2013. >> i that made comments talking about the firm's performance, it's solid, especially in the context of mixed economic sentiment in the quarter. he said there is improving sentiment in the u.s., that drove the franchise level, blah, blah, blah, said the operating environment has shown noticeable science of improve him. >> does he still got a beard? . >> he still has a beard. >> did they mention and we didn't incur any royal expenses. they cut him loose. >> no, that's actually. >> they are paying. it's very interesting goldman sachs, a lot of banks and firms have ens to cover this. goldman sachs effectively self insures themselves. they are paying completely out of pocket. >> that's weird to self insure. i'm trying to physical out how that would even work. >> when i say self insured. >> they will take on insurance. >> they are taking on whatever the risk is involved in this. the question would become if he is convicted, whether they would then try to claw back the money. >> he doesn't look like it. did you see that picture of him? . >> he doesn't look like he will be convicted, does he? . >> no. >> he looks like i'm kind of like a celebrity. >> you saw that story yesterday. >> did you see mary thompson? . >> there she is. obnoxiously sticking that mic in the guy's face. i don't know if you saw that story. she was off to rwanda, trying to do good. >> all right. let get some instant reaction and analysis to those goldman sachs results. joining us on the news line is marty mosby. these numbers are much better than the street had been expecting. what caught you by surprise? . >> it didn't catch us by surprise. what you are getting is that you are not experiencing the losses you could have had in the fixed income side because the looming voerk voelker rule out there, voelker's business is to be able to move out of the way and mavk making markets, not taking positions. could have been a head wind, we didn't see it a citigroup or j.p. morgan, today we're not seeing it at goldman sachs. >> you are making it almost sound like this is something still to come, something that could hit them down the road. >> actually, no, what we're zee saying is because they're not taking positions, what you will see is when customer activities begin to pick up like we're seeing as the markets kind of falling out, getting people rotateing back into the market. customer activity is really kind of winning the day. you are not having the positions offsetting that as you kind of go through this. >> is it some of the mortgage concerns aernt here, either, right that were as well with j.p. morgan. >> they're not a mortgage originator. this is all about customer activity. what you see in investment banking, on the brokerage side as customer activity and flows continue. >> as the rates go up. they don't do better. >> the balance sheet as much as a fee income and a brokerage investment. >> i thought they were a black box, i thought voelker made money by precluding the voelker roam. they're not doing that? that's the point. they're making it the old faxed way. it's not a black box like hedge fund. >> you are getting a customer as agent, not as principle. but to be able to move through the market. what you got to remember is there is a lot of squeezeout from the last time we went through recovery in the economy. a lot of those competitors aren't there anymore. so any increase in the overall activity, the participants left benefit from that more than they would have in the last seekle. >> the stock is up 1.5 morris, would you buy it here? . >> sure. we think there is momentum that will pick up. plus you get the operating leverage you were talking about in compensation lines. so there is a nice flow through edge. you get a kick of activities that would push you towards higher stock price. we're looking at the returns that have been subdued around a 10% return on common equity, start moving significantly above their cost of equity. pushes that tangible book value to that 20 oto 30% premium vs. that 10 to 1515 initially. >> thank you for the quick analysis. appreciate it. still to come, earnings continue. johnson & johnson is due out. up next, though, a big day for cnbc. we get ready for the delivering alpha conference. squawk will be live 6:00 a.m. eastern time. up next, we have a preview from kit kelly. coke cfo will talk earnings and the consumer. "squawk box" is right back. fin. pwc is doing something about that. . . >> welcome back, everybody. let's give you a quick recap. goldman sachs earned $3.70 a share for the second quarter. that was well above what the street was expecting. coca-cola, revenue and the case volume, those were below estimates. that's what people have been focusing on this morning. that stock is down in the premarket activity. coke's cfo is going to be joining us in a few minutes to talk about the quarter. we have a lot of questions for him. i'll send it over to you. >> thank you, becky. we are now obviously a day away from the delivering alpha conference. "squawk box" is doing the show from new york city tomorrow starting at 6:00 a.m. live. you can check out some of the morning lineup. our guest host will be staying. george chanos will be joining us and at 8:00 a.m. david mccormick. the partner of brimwater associates. jack lew will kick off the conference starting on "squawk" at 8:20 a.m. eastern time. in the meantime, kate kelly will be there all day as well. she has more on one of the conference's key players. >> one of the players is a man that typically stun shuns the spotlight. everyone wopders what he is thinking. this is u.s. attorney pree preet bharara. he has brought a string of cases against those including the bomber. and in albany, a queen's state senator who attempted to bribe his way to the new york city mayoral ballot. he is best known for his many insider trading cases. in 2011, one-time fund manager raj rajaratnam was convicted for insider trading. a tipster who is now appealing his own sentence of two years. the chemical foirnd steven cohen is under scrutiny for the same type of alleged crime. federal prosecutors have won convictions on a handsful of sec employees. as a part of a pending case against sec analyst, some expect cohen, himself, might be indicted. he, of course, has said he has done nothing wrong, though. there has been talk, but for the moment, andrew, he's rounding out his fourth 84 in this role. rudy guiliani made a comparison. we will see what's next for him. you heard the same talk i have of him replaceing eric holder, about him going on to bigger and better things. at the moment, he's right in the middle of this cohen case. it's very much unresolved. we heard that there won't be an indictment this summer. but they have other fish to fry. >> hey, kelly. we will see you tomorrow. delivering alpha, as we said before, "squawk" will be delivering alpha ours. we will talk with our guest host jim chanos and secretary jack lew at 8:20 eastern time. >> up next, not so bubbly earnings from giant coca-cola. we will talk the consumer trend, a global and currency head wind with the cfo of coke. we should know all about this. then at the top of the hour, more reaction to goldman sachs. we go inside the numbers and tell you what they mean for your portfolio. i know warren buffet is not happy at this number. [ male announcer ] it's time. time to have new experiences with a familiar keyboard. . >> j & j is up a little bit. but the move could get better because these numbers are pretty good. the company is reporting, let's see, a buck 48 vs. 1.39. the guidance is 5.40 the estimate is 5.41. the revenue was up above 17.9 billion. they don't make soft drinks. i do operate globally. the currency head winds and the things, the numbers are above expectations. the stocks are going to trade. >> how much of j & j do you say has something to do with the global economy 134. >> i mean, multinational. >> multinational consumer product. >> they got a lot of pharmaceuticals, too. and all the, you know, all the medical devices and supplies and all that stuff. it's definitely a diversified. johnny, any more of the p & g or any of those, right? . >> p & g, coke. that's a little different category. >> it's not like -- it's not coke. >> yes. >> i got to do this. >> second quarter results moments ago. the company top estimates. at this point there are soming a nojd a little bit of weakness in the case file. joining us now is first on cnbc from atlanta, the coca-cola cfo. i wouldn't call it a mea culpa. it's a tough operating environment in many parts of the world. weather didn't help either. maybe you can go into that. >> thanks number one for letting me be on this morning. >> sure. >> yeah, it was a disappointing quarter in terms of our volume. we said along the road there would be a bump here or there. we didn't expect the world to have a bump and the whole industry slowed down. a lot is a macro-environment. a lot is weather. a lot of it was the weather. i think the most important point in the whole thing is we continued to take share. we took volume share. we took value share across the world both as in total non-alcoholic beverages. you do what you do. you xeechlt ours is a great industry. it's going to come back. we continue to invest in our brands. have strong brands, a strong system. we'll be back as well. we are confident in the second half of the year. >> gary, we know where your growth is. you get good results in africa and asia, places like that. but this country, north america, still matters a lot and some people are pointing to, that's where the real weakness was in some of the case line, is weather in north america. >> in fact, if there was an article in one of the papers yesterday, if you go back and read it, without quoting my own resources, but you will see, it was cold and wet weather than it's been in decades. in fact, in atlanta here, if we don't get another drop of rain this year, we've already surpassed everything we got last year. so very unusual weather patterns and cold. >> and cold. >> and cold. >> do they not drink as much soda when that happens? . >> it's true. they don't. with rean industry that is susceptible to weather and i think the weather, we believe, is going to turn and, you know, there are some other countries like india, for example, where if you look at india, are you see our volume is only up one. we took a lot of share in india. it was up one, the monsoons started a couple weeks earlier. they were late last year. one thing we do know, monsoons only come once a year. things turn around. >> that's funny. late last 84, early this year. so that's how weather seems to be variable a lot. then it's sort of right in the middle if you average it altogether. that's funny how that works. a lot of variability. the means stays kind of consistent. >> yeah. i think we will see a lot of volatility in the weather. i think that will continue. >> you say someone changes like the weather. you money they change a lot? >> so this has been happening a while. >> it has. >> i'll be darned. >> i looked outside, it was hot up here. i thought, man, this planet is warm. i saw it actually was cold. as far as, what would make things improve in terms of the global economy still being a head wind? not the weather, but the other part of the equation that you said the economy is not great. >> well, obviously, europe is going to be a long-term recovery and i think that will continue and so that's one i think will be very slow recovery. china, now i would go second and their consumer spending has slowed, you know, consumer consumption has slowed across the board. so i think the chinese government is struggleing with what to do right now. but i think hopefully they'll get their act together and get china growth back up as well. will help a lot of the rest of the emerging markets across the world. so i think. and then the u.s. is a slow recovery as well. >> gary, with the fed possibly getting less accommodative, the prospects for a weaker dollar don't seem that great unless europe improves. so that will continue to be a head wind. hurts, coke, right? . >> it does. it does. i think we're in for a stronger dollar, actually, for some time. i think that's inevitable. now, there are some offsetting commodities. you see commodities coming down as a result of the stronger dollar. >> all right. thanks for coming on an giving us some more insight into what happened. we appreciate it. >> right. thank you. >> when we come back on "squawk" mohammed el-erian. wreak. in a world that's changing faster than ever, we believe outshining the competition tomorrow requires challenging your business inside and out today. at cognizant, we help forward-looking companies run better and run different - to give your customers every reason to keep looking for you. so if you're ready to see opportunities and see them through, we say: let's get to work. because the future belongs to those who challenge the present. wi drive a ford fusion. who is healthier, you or your car? i would say my car. probably the car. cause as you get older you start breaking down. i love my car. i want to take care of it. i have a bad wheel - i must say. my car is running quite well. keep your car healthy with the works. $29.95 or less after $10 mail-in rebate at your participating ford dealer. so you gotta take care of yourself? yes you do. you gotta take care of your baby? oh yeah! weekdays are for rising to the challenge. they're the days to take care of business. when possibilities become reality. with centurylink as your trusted partner, our visionary cloud infrastructure and global broadband network free you to focus on what matters. with custom communications solutions and responsive, dedicated support, we constantly evolve to meet your needs. every day of the week. centurylink® your link to what's next. ♪ here on cnbc, let's get a check on the markets, u.s. equity futures are now down. you know what, ko. check it out. the futures got ko'd. it's down a buck 50 j & j is up a bit. it's not helping the s&p:out of the three reports we got, two are good. coke was disappointing you heard the cfo acknowledge that. there's the asian markets. japan was closed yesterday. marine day. >> i did not. >> for the oceans. the abundance of the oceans. in europe you got some green, i mean red down, not much happening in london, france and germany are down less than around a half a percent. >> also, goldman sachs, joe mentioned, they came out with numbers earlier this morning. the earnings and revenue came in a lot higher than the street expected. joining us is roger freeman with barclays bank. roger, these numbers were a bit of a surprise. what really happened that caught the spreet by surprise? . >> the upside was in their lending segment. it has a lot of their own balance sheet investments. it was debt security. they had a good investing quarter outside of that. that probably accounted for, you know, that's the tax rate, it's lower, probably half of the roughly dollar beat to our number t. core businesses were a little bit better. it's just that some of the other banks were reporting. that was a real standout in investment lending. >> the other thing is they said they were number one on the streets, looking for the numbers again. again, is goldman tough to figure out the other banks, that i don't get as much guidance in. >> you know, i think it kind of depends on where you are trying to get at t. capital markets businesses are a little more vague to investors. you can't, there is not a lot of day to day or week to week reported. it's the distance attracts. it is transparent in that it's not, you know, it's not obvuscated by other businesses that don't force them to talk about what's going on in the capital markets. so i think the core business is actually reasonably attractive. it things like the principal investments are tough. they have a lot of seasoned investments. so as they realize those, these aren't news-making events, so we don't know theld e them headed into quarter. so you get surprises because there is realized gains along the way. >> what do you think of the stocks? . >> we think the stock is fairly valued. it's trading 1.1 tames book. it work out probably around 10%. it puts it about fair value where it is. i think the kwhe is, is there a path to 15% or higher? it's worth a premium. i don't think we bought the the answer to that this quarter. >> when you have the investment banking business. one of the things that has not been there, broadly speaking, has been mna dole making. >> that's right. >> do you think that's a cyclical situation? there was a report out a couple weeks ago that said this is cyclical and it's actually never going to come book? . >> i wouldn't read too much into those sorts of statements. i think that there is ail a lack of rick taking appetite. it's gotten better. you see it on the part of the investors, i think corporates are somewhat uncertain about some of the macro and overhang, so you got a lot of cash on balance sheets. it's probably it's coming. and i don't think that the traditional cycles necessarily have shifted. i don't see evidence of. that it hasn't happened yet. >> you know, the improving economic conditions have been a part of what really pushed things for the firm. is that something that you have been seeing broadly across the board in. >> yeah. there's a pretty high correlation between global ged growth and the growth of the capital markets businesses over time. over a decade, it's two, two-and-a-half time. so there is no doubt that growing economies drives investment banking, chemical markets higher. and again we have been in a pretty slow growth mode and that's, this gradual recovery from the financial crisis means a very gradual recovery in these businesses. you have a lot of reg egg la tore things they owe owe regulatory things they are facing. goldman, of course, is not the only major report. dow components, coca-cola and johnson & johnson reporting earlier. coco kala was inline. revenues were below stills. the cfo spoke to us a few minutes ago. he says the cold, wet weather that was a big factor in the weak case volume. he noticed the company did increase market share globally. also, j & j items came in $1.48. revenue also being street consensus on this number. joining with us more on this report, chief investment officer tom anderson. tom oversees $4.2 billion. tom, why don't we start out with johnson & johnson this morning. >> sure, becky, it does look like a good report. we were expecting them to report pretty well, pharma has been doing really well for them. i think our biggest concern was on the med tech side, medical devices side. we've seen some weak information last woke from into surgical, we were curious whether that would carry through. it looks like they did well on revenue. so this looks like a good, solid results for j & j. >> johnson & johnson, do you own them? . >> we do, actually. we manage money for high network individuals as well as institutions. so most of our clients are really looking for us not only to grow their wealth but protect it. we love fwhams that pay a nice healthy dividend, with johnson & johnson, you are getting a 2.9% yooerld yield as well as it's outpaced the market this year. >> coca-cola was surprised. they came in line with earnings per share t. case line was something the company itself said was a bit of a disappointment. they blamed weather. they blamed some of the global economic conditions, deteriorating a bit. when you look atco ka cola, you walk away and say it will be a better second half? . >> coca-cola is another name we won't own, for similar reasons, the yield, it seems weaker expectations have been baked into the stock price. it has lagged a bit lately. the results today don't seem to be a surprise. i think the conversation about the cooler weather and some of the overseas markets was pretty well baked into expectations. >> although, that stock is down more than 2.5% this morning. does that mean you'd buy more on this weakness? . >> yeah, our targets for coke is around 44. so, all you do is add 41 or so at the open. >> this morning you can get it below 40. 39.89 is the current priechlts you would buy more based on -- >> i think we certainly would. >> and, tom, when you look around, it's not just these two current companies, but these are global companies. it tells you a bit of how things are going for this earnings season. how does it make you feel about other holdings or things that you might be looking for. >> i think we always think earnings season is important. i think what's most important about this one is when you have this factor of fed tapering coming in september or later in the fall, i think a lot of what we're looking for, one of the indications of economic strength, last quarter, two-third of the s&p 500 names boat earnings expectations. only half boat revenue expectations. so what we want to focus is on are the revenue numbers. the companies they look to beat on the top lean. and is that a good seen the economy is recovering as the fed seems to think it is. i think that's where we are most focused on. there is other names, a name will be reporting tomorrow that we like a lot. matel. again, fits that profile. we have been talking about a nice 3% dividend, consistent record of returning shareholder value to investors, increasing these those dividends consistently over time. we are positive on that name as well. >> tom, thank you for joining us today. >> thank you for your time. also on an earnings note, folks, we want you to play armchair analyst with us. yahoo reporting after the bell today. we are wondering, do you think the second quarter earnings will meet, boat or miss wall street expectations of 30 cents a share. you can vote on the squawk facebook page. we'll get back to you tomorrow with the results. >> the other thing, ben bernanke is heading to capitol hill this week. he will be testifying at 10:00 eastern time tomorrow. then he gets to repeat that performance in front of the senate banking committee on thursday. politicians are expected to grim him about the plans for tapering and as we said earlier, widespread rumors bernanke will step down in january were actually true this could be his last monetary report to congress. in corporate news this morning, investigators probeing whether a fire on a boeing dreamliner in london last week. we talked about it cars, battery offage emergency locator transmitter. the part was built by honeywell. this is not low batteries we talked about in the last problem. honeywell says it is now joined in that investigation. so far the client declined details. it said it had no difficulties with this type of transmitter on many airlines. airlines continue to fly the boeing 787 as the investigation continues. the aerospace giant boeing has regained most of what they lost on friday. you see it there 105.66. >> dell shareholders will vote on thursday on the boyout proposal and adding to the uncertainty, one of the biggest investors, t. roe price says in its word continues to believe the proposed buyout doesn't reflect the buyout of dell. they talked about carl acon icahn put together an offer for dell. delivering alpha tomorrow. he will be one of the speakers during alpha conference inside to nelson peltz and john paulson. we'll be live down there at 6:00 a.m. tomorrow morning. >> i can roll out of bed. >> i know. >> next door. >> you roll right out of bed anyway. >> that's true. >> when you come in here. >> it's a close call. >> usually right around 5:49. >> you get here at 5:10. >> you get here at 5:58. >> a 10-minute gap. you don't need a lot of makeup, obviously. >> okay. we still got a busy morning ahead. up next, cheating in the banking industry. nearly a quarter of finance professionals said they would engage in insider trading and get away with it. 8:30 a.m. eastern, we will get the latest cpi. then squawk market master. mohammed el-erian will join us. stick around for him and a lot more. 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[ male announcer ] you wait all year for summer. ♪ this summer was definitely worth the wait. ♪ summer's best event from cadillac. let summer try and pass you by. lease this cadillac srx for around $369 per month or purchase for 0% apr for 60 months. come in now for the best offers of the model year. i turn of the model year. ed 65 last week. the math of retirement is different today. money has to last longer. i don't want to pour over pie charts all day. i want to travel, and i want the income to do it. ishares incomes etfs. low cost and diversified. find out why nine out of ten large professional investors choose ishares for their etfs. ishares by blackrock. call 1-800-ishares for a prospectus, which includes investment objectives, risks, charges and expenses. read and consider it carefully before investing. risk includes possible loss of principal. . >> welcome back to "squawk box." right now, dow futures are down barely. we'll see what happens. as i spoke, never mind. we'll see what happens. coca-cola has been putting pressure on the dow jones industrial average. it's about $1.3 billion. shuffle is the company. the place is the 24% premium over yesterday's close. >> okay. also, a new survey found unethical behavior. according to study competitors engaged in illegal-on-or unethical behavior. they said they would engage in insider trading if they could get away with it. >> good morning. >> here's the question. i wrote a column as well. 24 responded said they would engage in insider trading. the response i got wasex% online. how accurate do you think the respondents were in this. more importantly, duping it's true just on wall street? if this question was asked of anybody in any industry and said i would give you 10 million, what do you suggest? . >> they suggest people underreport conduct associated with themselves and their organization, so it's probably true. 24%. as far as whether other industries would have such high numbers, i suggest that the numbers would be a little bit smaller. >> the other thing i found striking was when you broke it down by age and seniority in the business. we found the number of people were more incloind to do things that might otherwise be unethical, across the bird for the question around insider trading. it jumps. what does that say? is that people saying they want $10 million? how do you come to dprips with that? . >> i tell you, it was very troubling throughout the survey, younger professionals said they would engage in this conduct or fear reporting this conduct and, you know, i have some theories on why this might be. one might be that people have short memories. so these folks haven't experienced the hardships. >> when you think why you would definitely not do this one of the things you would say, wow, it isn't a deterrent. part of that question is, you are not going to get caught at all. you are relying totally just on -- >> a moral question. when you are older, you seen the wall street, you seen the physical guy. you seen everybody go to jail. >> that's one of the things that came out of this survey is that financial services professionals had higher confidence in the se c than they had. >> the deterrent is a thing. >> we haven't seen a lot of people in the financial crisis. >> or any of the politicians. >> you think that will be changeing. elaborate. >> sure. i have the benefit of being at the fcc and representing people two are reporting misconduct. they involve significant misconduct. i expect you will be hearing more about that in the coming years. >> modely, we focus on the ethics on wroet. >> do you think this says anything about the industry? >> i definitely think many in the industry have lost their moral compass. >> you don't think there are lessons learned from the crisis in that's a suggestion, by the way, the result, of the survey. >> sure. one-third of the respondents said things weren't better. >> thighny of the lawyers, smaller percentage the insurance industry? just wall street? . >> you don't think it's human nature? . >> i do. >> some part of it in. >> more scum backs on wall street. >> joe, i would say people go to wall street more for advancement tan making the world a better place and different industries have less of that. >> is that true? as they go to competent america. if you want to go and make a good living, that means you are in for not helping other people? . >> of course, it was canned. sometimes do well, better to be a forgiver? . >> no. >> who i'm saying is there were certain aspects of the business world that allow for broader benefits. there are some businesses where the ability to make a great deal of money for ones self is a primary driemplt if you ask professionals, they would say they would get in there. >> $450 million is there. >> you don't foley about that. what's going on. >> that's correct. people when they hear about us, more when the cases start coming. >> the profit taking incentive for entrepreneurs is what created all the jobs in the country. it's almost the meaning of profit incentive. >> exactly. >> not having wall street. >> no. you are trying to enrich yourself. somehow you are doing things that just aren't. >> hot profit making is a good thing. >> yes. . . >> this morning, we have the latest inflation in june. right now we are ahead of a break. take a look at the u.s. equities futures. a lot of earnings out, dow futures up by about three and three-quarters points. "squawk box"ing will right back. we route your order to up to 75 market centers . . >> welcome back to "squawk box," we are seconds away from ppi numbers. we do have green arose. doi jones is off or rather up four points. s&p 500. rick is here. the numbers for the week. >> a careful 1% on cpi. i heard the roll factor. i like when it's on cpi. up half 1%. food and energy up .2. head lean up 1.8. is .4 hotter than our last look than if we look at year over year, exfood and energyment it's as expected and actually .1 cooler than last look up 1.7. maybe the biggest news of the day is the dollar is under a bit of pressure today. the dollar index that is. plus the news is let's watch europe, the equities. there is a lot of issues going on in europe we will see more attention than we know what's going on. i think that may be up for a change. yields are getting closer to 250 on the low years. as i look up on the board the treasury market is paying attention to the data. >> it must be a chain reported a. couple standouts, gasoline prices up 6.3% on the month. we may get more in the month of july as well. a bigger bush el in medical care costs. you may remember it fell 0.1%. an unusual fall in the decline in prescription drugs. they've reversed themselves. 04 and 05 were the prescription drugs. transportation costs. looking elsewhere, commodities up 1%. airline fares standout and decline. those are up 2.2, may be declining. i don't think overall they are declining. overal overall. >> i just did at this time last time. i'm an idiot. i didn't realize. you don't actually boy a seat. right. you buy a rit to boy a seat. >>. >> you go online, you get the tick, right? then it offers you a ticket. you have to pay for every seat. there is no seat at the price that you bought the ticket at. and you have to pay for the -- you know what i'm saying? . >> you go on. >> it's crazy. you have to go on for carry-on backs and your luggage. airline tickets are still cheap. >> how do you figure? . >> because i'm old, i remember when you tried to fly somewhere 25 years ago or 30 years ago. it was like $800. now, i can go to jacksonville for $350. >> i went when people's express. i used to go back and forth. >>. >> somebody forwarded it to me. it was staggering. >> the figures were, i don't remember them. it was a $6 hi. the aflac trivia question was first it was introduced at $600. which is today's prices it was $2,700. then you factor in, so the intro mac or the base imac is $1,200. so it's more than half the cost of the introduction. >> it's five times. we want to talk about the federal reserve. i think that to me, i think the base case the burden of the economy is to prove to the feddies they should not taper in september. i think that's the guidance. i think it's almost but not quite poit policy. it's not clear to me that the recently weak economic numbers are enough to derail the appointed tapering in september. i don't know if we will get that from bernanke tomorrow. but i want to hear where the burden lies tomorrow. are we headed towards tapering and what kind of economic data? i think the emphasis will be on tapering and tightching. i think the market is gradually getting. i think it's related to the job gains. how effective the program has been. i don't think he wants to be right on the amount of stimulus. i think he wants to reduce it 65 million. i think it will be progress and that's on the late side. >> the market is getting this gradually. i wonder what your thoughts are in terms of the idea being the economy will say we won't taper in september. i know the market has had justed to a lot of this. if you think there would still be an ad judgment to make on the market if it physicals out september is really it. >> traders on this floor, a sen cal bunch. they're not sure if you got in the head of the bernanke, once youscope escape that, you come out smarter than you are right now in the unknown world of trading on these trading floors. i think that strong data is still going to push rates up. if you polled most traders on this floor. they don't think any central bank will have the rates taken away peacefully. >> they're a bunch of crooks and scumbacks trying to enrich themselves on the floor of the trading exchange. >> don't talk about the committee like that. there was a good conversation in the last 7:00 hour. you asked up with of the guests whether or not the market factored in. the tapering is the base case of the market. so we have shaken out and require absolute qe. >> i got a poll here that says 25% of journalists would book guest based on anotherenty. >> 25%. >> 100%. >> 25% would unethically try to promote a dlum in the new york tiles. >>. >> i want to go on this show, based on trying to get people to this column. >> would that be enough 25% are ethical enough to do that? . >> we felt that it would be nice to have. >> 54% said that, right? . >> 52%. >> i agree. we are getting next year. >> a change. what would it be like five, six, ten years ago? . >> the under wear guy, too. you love underwear. >> i did not. >> i have enough underwear. >> you are not wearing it today. that's weird. >> when we come back, our squawk market master. >> we were work out together. >> when mohammed el-erian comes, we will talk about the bonds and the market. stick around. peace of mind is important when you're running a successful business. so we provide it services you can rely on. with centurylink as your trusted it partner, you'll experience reliable uptime for the network and services you depend on. multi-layered security solutions keep your information safe, and secure. and responsive dedicated support meets your needs, and eases your mind. centurylink. your link to what's next. . >> welcome back to "squawk box." joining us now is mohammed el-erian. we haven't spoke to you in a while if i were running a country, would you start with us? . >> i thought you would start by thafrging me for the mets beating the pirates on sunday and helping the cincinnati reds. >> that did help a little bit. you've seen the reds have been slumping, mohammed, you know, they were up well above $600. it's been a little frustrating. i feel like you. i know the frustration you have felt. we talked about earlier. i can go and stay in newport beach and make millions. i think you made the right choice. are you a guy that would go and would go if you thought you were asked. >> you want to get rid of me. i'm happy here, thank you. >> do you expect expect bernanke to enlighten us tomorrow or further confuse us? . >> let me tell you what i think he will do. a high wire act without the excitement. he's just going to try to convey what you have talked about. he will try not to rock the boat. especially so given the economy the underlying economy is tracking about 1.2% growth. so he doesn't want to cues any excitement he doesn't want the economy excited. the markets are looking for somebody deaf net. is it the ben bernanke of may 22nd and july 19th or the ben bernanke of july 10th? right. the market wants to know which one it is. it will be interesting both tomorrow and thursday. >> mohammed, where do you think a ten year is headed? where should it be right now? all of the sort of panic is already sort of come out of the market, hasn't it? . >> so short term, we think yields are more likely to come down for the ten year, prices go up from here. why? because we went over the territory. the technicals kicked in. we found a lot of technical activity that made it overshoot. short term, we see a ten-year yield coming down by going up. longer term, three to five years. we are in a rising environment, the market has to adjust to. >> do you think short term is one to three years? >> the next few months, we think an opportunity in terms of interest rate risks. >> are you seeing the reports, weakness, we talked about in terms of money out of pimco. where is that does that stand? what do you see? . >> record inflows into our fuvendz and that is the end of april. phrase 2 are significant outflows. now, they have slowed down quite a bet. they are undifferenceated inflows to much more differenceated patterns. >> what do they look like? . >> we are seeing coal product, inglows in unconstrained bond funds. it's just like you are seeing in the markets. after the initial shock. >> what does it tell you? . >> i think it tells you they have slowly internalize that. much of the outflows we saw virtually no appetite in the street you saw this crowd dpo doing automatic trades and our benchmark positioning coming back at the same time. that's what caused a major dislocation in may and particularly june. now the market is trying to normal looizize, it's only normalized because the fed has talked back what they said. so it's still a normal one soon. >> when people opened their statements, you are telling us you haven't seen that? . >> no, we have seen deceleration in the outflow. the reason why is the sell-off is what publicized. you know, it was publicized on tv, in the newspapers, so people didn't need to way for that, for their statements. >> that's interesting. >> mohammed, whirlwind is back? . >> it is back. remember, the conventional wisdom is nothing would happen in the elections. there were many reasons for that. most important, the ecb had everything under control. what people did not factor in is social and political developments. you have issues in spain and social issues in other countries. yes, europe is back. fundamentally, europe will be with us until they find a way to promote economic growth. they're not there yet. >> are you seeing and hear, mohammed, the good reason for rates to be heading up? is the new normal getting a little better, more like the old normal? are we finally hearing, we are five years in here? . >> so we continue to heal. we haven't got all the big issues, which are not enough aggregate demand, two fuel structure reforms. we still have a level economy t. leverage has been shifted from the private to the public sector. so we continue to happily as an economy. you see it in housing and other sectors. we still are looking at a growth rate of 2%. remember, we are tracking 1.2% in the second quarter, 80% of the data in. so we will have to beck up next quarter to get to 2%. i don't know where the fed gets their projection from. joe, the fed wants to taper for two reasons. one tie have a more optimistic view of the economy. that's good. two is they're worried about the costs and risks of the colossal damage consequences. so that two things they are trying to fulfill. that's why the market becomes volatile. >> you have the boys starting the night, at least? . >> we have. isn't that amazing? . >> you want to watch? . >> it's on a little bit late. i love, i remember as a kid how much i loved the all star game, seeing my team. it is great. great for kids. >> thanks, you are right there with me. you started it. >> we're dumb. go ahead. >> one thing. we talked about. he knows the whole crew. >> we're for larry. i read the huffington post. i decided i love him. after seeing those two people. >> how will the markets internalize all this? . >> i think all four, yellen, somers -- >> how correct you are. >> are really qualified. i think the markets will react differently. i think yellen will assume a continuation of bernanke, gooiter will continue that -- geithner. someers will want to put his imprint on the fed early on. ferguson is going to be more like is more like a geithner. >> you don't know who? well, you don't have the insight? some think that summers is coming up more and more. somebody is floating a balloon somewhere, mohamed? >> yes, i read the same articles that you do, joe, believe it or not. >> okay. she is a friend of the show. like i said. we like him. >> yeah, we would. >> connections at harvard. >> okay. >> oh, you got that, too, though? >> man! my daughter is set. my daughter and son. >> thank you sh, mohamed. >> thank you. >> coming up in the last few hours, we have quarterly reports in goldman sachs and the two dow components, and we will talk it all over with jim cramer when we return. tomorrow on "squawk box" bank of america reports before the opening bell. we will bring you the numbers and instant analysis. live from cnbc's alpha conference in new york. this morning. looking at the futures the dow opening five points higher, and the dow up about 4.75 and nasdaq up. and we can take on coca-cola and the weather and of course, j and j. >> well, j&j is the ceo who comes in to make a difference in the world, and he is turning around the basic stuff that you see in the drugstore. coca-cola is disap poipointmentd pepsico has a better model. i am disappointed. >> you are now saying that, hold on, you are getting behind on this one, and reversing the course a little bit? >> well, the all-time high, and the snack model is better. look, if coca k-cola is disappointed in themselves, who am i to say, don't worry about it, and goldman sachs we see the turmoil on the fixed income was fabulous and goldman does incredibly well when there is a lot of crazy things happening, because they know how to trade in that environment. this was a super quarter, and i'm surprised that the stock is not up more, but it was yesterday. >> and what about j&j? i thought that the problems would be tough to fix, jim? what happened, jim? the quality stuff and the factories and what happened? >> well, it is controlling that well, but just the regular pharmaceutical business that line is absolutely terrific. i think that gorseky has energized it. and worldwide medicals and dying nos ticks has been underperformer and 4.9% gain, and gorsky is makeing a difference. i thought the ceo before was resting on the laurels, and gorski has come in and made a very good number. >> and even warren was disillusioned with j&j? >> well, they should have been disillusioned with the ceo who was ballyhooed, and a terrific manager, but in tenhe end, he w not delivering like a procter & gamble, and so gorsky has come in and this is a red hot stock, and very few people have been believing in it for ten points, but the points are deserving and the stocks are higher. >> jim, is wall street by definition attracts low lives and scumbags, and did you hear that guy earlier? >> well, i think that wall street, and there a lot -- whenever there is this much money, it is tempting to take a short term and not a long term greedy approach, and you can make money, and we went back to what happened in the chaotic period. what we did was to see over and e over again, that there were people who made $10 million at the age of 27. and they quit. they didn't need to continue. >> and what about the ambulance chairses and the do s chasers and docker or thes with unnecessary bypass, and give me the industry and i will identify the scumbags and it is human nature, and you are disparaging the whole profit industry. >> well, i'm for the industry. >> and it is so annoying the sanctimonious. >> well, it is a lot of money, and where the money is and people do things that they shouldn't, but do i think that they do things that they shouldn't in every business. >> thank you, jim. coming up, several candidates for the stock of the day, and there can only be one winner. every day we're working to be an even better company - and to keep our commitments. and we've made a big commitment to america. bp supports nearly 250,000 jobs here. through all of our energy operations, we invest more in the u.s. than any other place in the world. in fact, we've invested over $55 billion here in the last five years - making bp america's largest energy investor. our commitment has never been stronger. [ whirring ] [ dog barks ] i want to treat more dogs. ♪ our business needs more cases. [ male announcer ] where do you want to take your business? i need help selling art. [ male announcer ] from broadband to web hosting to mobile apps, small business solutions from at&t have the security you need to get you there. call us. we can show you how at&t solutions can help you do what you do... even better. ♪ stock of the day is coca-cola, and the dow and the matching revenues falling short and weaker case volume. thank you, andrew. be becky, welcome back. i will make sure that you join us tomorrow. and tomorrow from new york city life from alpha, and you were singing today, nice. sweet sound. join us tomorrow. "squawk on the street" is next. ♪ good tuesday morning, and welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber. and stocks going up for nine straight sessions which is the longest in nearly a decade and the futures are buffeted by global slowing and at
years when we came out in the first quarter with a full head of steam every year, that's right, every year we finished up by the end. so what was with all the gloom today? did you see it like i did? i mean, what was that? >> the house of pain. >> s&p backsliding .54%. nasdaq down -- i'm sorry, .45%. nasdaq nose diving .87%. that was a downer. dow fell only six points but that was aided by a last-second gain in united health on news of a positive change in medicare reimbursement rules. most of the day, though, it felt like a hangover that no one wanted to get over. from around the first quarter. felt like the doubters were out in full force today. everything from getting the jump on the sell in may crowd. [ booing ] to worries about when europe opens because remember, it was closed. to qualms about the cold weather in march and how it upset the retail trade. you know what? all that stuff, that's just one more reason for you to focus on individual stocks and what the companies behind them are doing to bring out value irrespective of these big macro concerns. now, near the end of last year i put together a list of ten companies i told you that i felt were seriously undervalued versus the market, and i said these companies are companies that shouldn't just be standing there, they should be doing something! they weren't selling in may and going away stocks! they weren't stocks that hung on every word about europe like the cyprus thing. no! they wouldn't be dinged by dirty russian money caught up in the spin cycle without a chance to be laundered even or folded and put on hangers. these were stocks that didn't need the chinese housing market to stay alive with pleasure. they didn't even get affected if the bubble's pricked over there. they weren't going to be quarantined or sequestered or whatever it is that's supposed to hurt yosemite sam and close jellystone national park. isn't that stephen king's new book, "the sequester"? these stocks were on fire. with the first quarter in the bag we've got to review how they're doing because i think these are still some of the most fertile stocks out there. first in the aggregate, don't just stand there, do something cohort, spectacular performance. from november 29th when i started recommending them through the end of the first quarter, and i pounded these stocks almost every day during the first quarter. they have taken off like rockets at cape canaveral, wherever rich people are shooting off rockets these days. the don't just stand there mob is up 23.9% versus the s&p 500's 10.2%. wow. smoking. winner? hess. which just today announced the sale of its russian unit to lukoil for $2.05 billion. hess has been under siege since the beginning of the year and is now going to $73 and change from the $50 price tag where it was -- when i suggested that if hess didn't do something to bring out value someone else would. sure enough, a hedge fund outfit called elliott management has put intense pressure on hess to unlock its potential, and that's exactly what hess is doing. don't forget the company recently sold a small position in the eagle ford shale, remember that's the most bountiful shale in america, including the bakken. to sanchez sn, which is still stuck right where it was when the deal was done. that's stupid. i think sanchez is a -- >> buy buy buy. >> who's next? nobody believed that decker's could ever come back from the depths it had fallen going to the new year. plunged from $117 in 2011 all the way down to $38 at the time i added it into the don't just stand there mob. turns out that decker's had plenty of life left in it courtesy of a cold winter and a dramatic decline in the price of fleece. that's the key fluctuating ingredient. the stock went all the way to the 20s. but no one ever catches the bottom or the top. this stock has racked up a 45% gain since we said it shouldn't just stand there. but bizarrely, 30% of the stock's float remains short. people are still betting against this thing. i think a reinvigorated decker's has a lot of room to maneuver and if it doesn't i still believe it is a natural for vf corp. to take a run at this company. in order to bolster its reputation as a fixer-upper of older seemingly tired brands. just like it did successfully with timberland. manitowoc, that bizarre amalgam of food service equipment and cranes. rallying 33%. that might be enough to keep it out of harm's way of activist investors. i still believe the company could be on course to break itself up. that's when you -- what i said it could double. but in the interim when you check with the regional banks as we do all the time you do get the impression that commercial real estate construction is coming back, and that's right up manitowoc's alley. don't forget, there's about 15 different condominium buildings coming up in brooklyn alone. boy, the construction's on fire for 2014. mine safety appliance is up 29% since its incredibly boring no one cares about stock except for me, it was included on our list. and that's because of earnings. after painful adjustment from expansion to europe this company which is the premier independent safety appliance and power firm out there remains in the sights of the honeywell, of dupont, of 3m, all of which have expressed interest in the sector but not yet the company. i can't believe that dst, that's dog sam tom, hasn't separated itself into financial services that help brokerage houses with record keeping and a fast-growing record keeping company for life insurance annuity. as i said they should. and i said they should get rid of the rest of the real estate. that way they would be able to stay independent. how is it able to stay independent? perhaps because it's up 24% and then another 52-week high today. home and security. the company has not felt compelled to spin off its security and storage segment including master lock from its kitchen and bath unit. what a natural. it should be done. i think by year end they take a run at this company if only to have less exposure to the hobbled european market and fortune would be wise to break itself up before it gets swallowed up. i think they think the 22% is gain is enough. i think what we've seen so far is not enough. and i think the housing industry is on fire, there's more to run. here's the biggest blue chip around, and it's been a horse. i'm talking about j&j. johnson & johnson, up 18% since its selection. this company, which my charitable trust proudly owns, is still being cleaned up by its brand new ceo alex gorsky. so far all the big pharmas which have gone out of the way to create value, whether it's bristol myers or pfizer or schering-plough which sold itself to merck after cramer fave ceo and now author fred hassan decided there's no more value left to create. it's time for j&j to follow in the footsteps and split into the fast growing pharma business, the cash flow machine that is consumer products and the troubled but profitable medical device business. meanwhile, the company's still got that 3% yield, attractive alternative to bonds especially when you factor in the favorable tax treatment for dividends and the aaa balance sheet. if you told me that reliant tech, atk, the defense company, would be up at all considering the sequester, i would have been shocked. yes. like wichita. shocker. 16% gain. it's posted. it's completely remarkable. if you're a defense contractor, starved for growth, you can pick this stock up for a song. less than $3 billion. i think it's possible. now, we keep hearing cautionary comments about the numbers that bed bath & beyond will report. that's kept a lid on the stock. will the lid come off after urban outfitters reported good numbers after the close? no. i think this stock stays here if only for a matter of time before a private equity firm says all right, that's enough, let's just buy the darn thing. 9% doesn't take it out of the cross-of these aggressive buyout firms. they're always looking for something to do. finally, the one laggard in the group is amazingly a stock that we have just liked from when the show began. hain celestial. hain. hanes is doing better than hain. underwear's selling better than organic food! anyway, this one's flat since we included it in the don't just stand there cohort. the whole organic segment seems to be hostage to whole foods, which acts terribly, and the short sellers have been swarming endlessly around hain, a company ceo irwin simon built with a series of acquisitions. is it time to spin off the doubting non-food offerings? it's been enough of a laggard that i think something good could happen. here's the bottom line. these ten stocks have been on the move far more than the broader stock market. ever since we anointed them as companies that should unlock their hidden value. right now their strong performances kept the activists at bay except for hess even though they're all big in the market except for bed bath and hain. i think the outperformance is just beginning. these stocks are all still worth buying with maybe the exception of hess and the only reason i've cooled on hess is that with today's sale of its russian properties it definitely lessens the chance for an acquirer to come in and buy the whole darn thing. i want to go to brian in florida, please. brian. >> caller: cramer! >> yeah. >> caller: i love you! >> love you back! >> caller: all right. what about these electric cars? what about tesla motors? talk to me. >> all right. i'll talk to you. this fellow musk, he's arrogant as all get out, but i'm beginning to believe. tesla reported some numbers. i know it's only a few cars, but boy, they're really just -- they're clobbering the expectations. and meanwhile, the short sellers, tesla looks like the real deal. for now. don't just stand there, do something! the ten companies that were undervalued that didn't matter about europe, didn't matter about the s&p, didn't matter about the etfs, they're up with a vengeance. and you know what? i think they just started. "mad money" will be right back. >> coming up, healthy returns? all this week cramer's checking up on the strongest trends in medical science for companies in the fight against rare diseases. tonight, don't miss two stocks that could keep your portfolio in tiptop shape. and later, first of four? the first quarter's over, and it's been the best one for investors since 1998. cramer's looking through wall street's best and worst to find which stocks may be able to keep up their winning ways. plus, oil versus water. they're laying the groundwork for the next leg of this company's economic recovery, but which of these companies could engineer growth in your portfolio? don't miss this pipeline powered face-off. all coming up on "mad money." >> don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer, #madtweets. send jim an e-mail to madmoney@cnbc.com or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. for you... ♪ i'm up next, but now i'm singing the heartburn blues. hold on, prilosec isn't for fast relief. cue up alka-seltzer. it stops heartburn fast. ♪ oh what a relief it is! since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at ducktherapy.com. try align. it's the number one ge recommended probiotic that helps maintain digestive balance. ♪ stay in the groove with align. all last week i talked to you about the past and future of the pharmaceutical industry. these days the stodgy old big pharma names, they're mostly places to put your money in if you happen to be looking for nice safe dividends. i call them fixed income equivalents. but back in the 1990s big pharma was synonymous with growth and these stocks traded at sky-high price to earnings multiples. and now i think there's a whole new generation of drug companies ready to take up the mantle, to become what big pharma was in the '90s, fast-paced growth stocks that seem downright unstoppable. they used to go up almost every single day. now, last week i highlighted the larger biotechs, celgene, gilead, biogen, and regeneron. last one a little controversial but i've got to tell you it's moving on up. i'm far from finished, though, exploring this theme. this week we're going to take a closer look at some relatively smaller drug stocks that, yes, are far more speculative but have some promising new drug pipelines and bright futures. for starters we have to talk about one of my favorite areas in all of pharma, the orphan drug space. if you're a biotech company you want to be developing orphan drugs, no doubt about it. for those who don't remember, what's an orphan? an orphan drug is one that treats an incredibly rare disease, not that many people have. how rare? in the united states it's a disease that afflicts less than 200,000 people, and in europe one that occurs in no more than .05% of the population. why such a smaller customer base? one reason is the fda tends to go much easier on orphan drugs because they know there aren't any other alternatives for people with these rare diseases. second, once orphan drugs get approved, the companies that make them are allowed to price these medications truly at astronomical levels. we're talking drugs that can cost hundreds of thousands of dollars a year. because again, the people with these rare diseases don't have any other choice and they cost the system, the health care system -- a lot of times their treatment involves hundreds of thousands of dollars of care from one of these hmos. so they actually are, believe it or not, a bargain. meanwhile, the government provides orphan drug developers with all sorts of incentives because otherwise no drug companies would even bother to treat these diseases. you end up with tax incentives, enhanced patent protection, clinical research, years of marketing exclusivity. in short, orphan drugs are the sweet spot of the industry. but if all that isn't enough to convince you, how about we consider my two favorite orphan drugs at the moment? alexion and biomarin. i first recommended these names about 2 1/2 years ago, in october of 2010, and since then alexion has rallied an astounding 183%. biomarin has rallied 181%. these are fantastic moves. we liked orphan drugs almost since the show began. i think these two stocks, believe it or not, even after these runs, have a lot more room to go higher. so let's start with alexion, alxn. that's an $18 billion company, $95 stock. right now alexion has just one drug on the market and i know that's going to freak you out. but listen to me. solaris is a blockbuster. okay? this is an orphan drug that used to treat several ultra rare blood conditions. known as pnh, paul nancy harry, which when left untreated can lead to anemia, clotting, and death. that's why solaris is among the most expensive drugs on the market with a price point that's, don't blanch, about $500,000 a year. if you have this disease, you need to keep taking the drugs for the rest of your life. plus solaris has multiple indications, something else we love when it comes to drug company products. in 2011 it treated a rare but deadly kidney disease driven by genetic mutations. and the opportunity for this disease is at least as big as the complex of blood diseases solaris was initially approved for. it expects to generate an astounding $1.5 billion in sales. that is up 33% from last year. that's amazing growth. and this is still a growing franchise. it's been on the market for pnh the blood disorder since 2007. so the growth in europe and the united states could be slowing on that front, but there's still plenty of upside coming from the rest world, places like turkey, brazil, russia, korea. and for the second indication, the rare kidney disease, soliris was only launched to treat that one 18 months ago in the u.s. and the european launch is coming in the second half of this year. so just when these two indications, this drug should continue to fuel alexion's rapid growth for as far as the eye can see. plus the company's testing solaris for a host of other rare conditions. we could start seeing results in some of these studies sometime this year. and alexion is expected to file for approval to use solaris for another type of kidney dysfunction in the near future. could add $2.35 billion in sales to the drug's peak. in short, alexion is an entire pipeline in this one amazing drug. and beyond solaris alexion also has a treatment for rare, sometimes fatal metabolic bone disease. that's in phase 2 trials right now. that's in the out years. but you know what? the thing i most like about this stock, it sold off more than 19 points from its high of last autumn. two main reasons for this pullback. back in october the company reported a quarter many people viewed as disappointing because solaris sales were in line with the street's estimates rather than beating them. however, i think this is a case where the analysts got too aggressive and didn't model the quarter correctly, as i'm not at all worried about this drug's growth going forward. the second issue is more recent. at the end of last week alexion got an fda warning letter from its rhode island manufacturing facility that makes solaris. now, alexion has plenty of solaris supply and over the next solaris supply and over the next couple weeks they'll start making changes in the production process that makes the problem go away. sounds expensive. 33% growth rate. that's actually a bargain. how about one that we've had the ceo on, i really like? it's called biomarin. smaller orphan drug with a $7.7 billion market capitalization and no profits to speak of. but i think biomarin has a very promising future. the company specializes in developing enzyme replacement therapies for rare genetic diseases. remember, these are orphan drugs. and these treatments typically cost patients or their health insurance providers somewhere over $300,000 a year. right now biomarin has two drugs on the market for a metabolic disorder known as mps, mary paul sam, that can cause horrific progressive damage at the cellular level if left untreated. biomarin's partnered with sanofi on the drugs aldurazyme. this owns all the rights to the second mps drug, naglazyme which could do $300 million in sales in by 2015. and biomarin has the treatment for -- i'm going to mispronounce it. phenylketonuria. another genetic disorder which can cause several developmental problems as well as neurological issues. this drug will only do $100 million in sales by -- remember, this is a giant pastiche. you have all these drugs that come together for some very big sales. now, biomarin is a bountiful pipeline. and just today, just today the company submitted vimazin to the fda which is a treatment for another metabolic disorder. if this orphan drug gets approved, might do $4 million in annual sales by 2018. plus last week biomarin told us they'd be starting phase 3 trials of their drug for pomp disease by the end of the year. and the company has new more effective phenylketonuria drug that's entering phase 3 next quarter. this company as you know when we had the ceo on has more irons in the fire than almost any orphan drug we follow. biomarin less than two points off its highs. the company has so many shots on goal. the move is far from over. here's the bottom line. the future of pharma is in these ultra rare orphan diseases that require, unfortunately, very expensive drugs to treat. and the best of the orphan drug names are alexion for a bargain at these levels after this pullback and biomarin for a stock that gives you multiple ways to win. admittedly, not billion-dollar drugs, but altogether certainly possibility for billions. let's go to mark in wisconsin, please. mark. >> caller: yeah, jim. my question is about immunogen. and recently they got approval from the fda for one of their drugs, and the process to deliver that drug. my question is about what do they have in the pipeline and what are their prospects for europe and asia? and thanks for everything you do for us little people, jim. >> we had, as you'll recall, we had mr. junius on, dan junius. and there's a bunch of things immunogen's got going for it. they don't have all the rights for this first drug. we were liking it at $11.50 for this tdm-1, but it does have a less than optimal royalty agreement. that's what really got us down. but it does have some other things going on. and those were -- the reason why i'm not just spouting their names, if you remember, they were all -- immunogen and then a number. but they were for ovarian cancer and for lymphoma. and i thought they sounded very promising. let's go to don in pennsylvania, please. don. >> caller: boo-yah, dr. cramer, from beautiful bucks county. >> holy cow. i was there this weekend, man. it looked better than ever. >> caller: it's fabulous. it's fabulous. dr. cramer, my ticker is achn. i know they have a lot in pipeline, and i'm just wondering whether it's a good time to add to my position or hold tight. >> well, we are big believers in trying to solve the problem of hep c, of hepatitis c, and that is why we have been such strong believers in the stock of gilead. i'd rather see you in that. the orphan drug companies are in a sweet spot and our two favorites right now are alexion because of that remarkable pullback off the facility that it had in britain just doing the number and not beating the number. and then biomarin, where we had the ceo on and i think they've got so much in the pipe that you've got to own, one or the other. they're both speculative. after the break i'll try to make you some more money. >> coming up, first of four? the first quarter's over, and it's been the best one for investors since 1998. cramer's looking through wall street's best and worst to find which stocks may be able to keep up their winning ways. the first quarter's in the books. i say so what? hey, listen, all we care about on this show is where stocks are going, not where they're coming from. i can't make money off the past. we often hear that as goes the first quarter, so goes the rest of the year. which would suggest that this year will be pretty darn fabulous. again, i don't care. i want to know which stocks are going to lead us. so let's look at the top ten performers in the s&p 500 for the first quarter. in this cohort i see plenty of repeat coming. i think these stocks remain fertile ground for more price appreciation. get your pencil and paper out. we're going over the winners, and i've got some surprises here. first up, we've got netflix as the leader in the s&p 500 for quarter number one. that's up more than 100%. despite its run, i think the stock has a strong chance of repeating its excellent performance. netflix has several, not all obvious trends going for it but i'm going to detail them because i know a lot of people love this stock. those trends are very much, i think, in their infancy. first, after seeing netflix as a rival, even as an enemy, the major producers of content have decided to endorse it as a friend. the company's been an endless source of payments for majors in exchange for programming. beyond that as independent networks which are doing incredibly well produce more series like the walking dead, down-ton abbey, louis, "mad men," or original netflix productions like "house of cards," the only real way to crack into them is by subscribing to netflix. got to know where to win. it's way cheaper than buying all those dvds for people at home. let's take the case of "walking dead." five million people a week now watch that show, but frankly, it is impenetrable unless you start at the beginning. i mean, why aren't they going to the cdc? why aren't they going to fort bragg? well, you've got to start at the beginning, for heaven's sake! anyway, you binge it. you binge view via netflix. and that assures you that you're up to speed. the second reason why this heavily shorted stock can continue its ascent, netflix, just like discovery communications, directv, and all the cable companies, it's a housing play! as more homes are built, cable, dish, and netflix get hooked up. it's a natural tailwind. don't forget, when you buy that new tv, it's got the netflix clicker at the bottom of it. finally, i still believe that netflix remains a takeover target, most particularly for apple, which needs mobile content offering as well as something proprietary to run on apple tv. that stock goes down $13, they ought to be thinking how do we reverse that? netflix. meanwhile, this one. microsoft, which is still trying desperately to be cool. this guy's dancing on a table. we want cool product, not good taste in tuna. anyway, this could become cool once it bid $13 billion for this $10 billion company. don't rule it out. why should this monster stay independent with its 27 million subscribers and steve ballmer desperate to leave a legacy? especially since those numbers are growing so quickly after it appeared the company flubbed the client relationship. can anyone even remember what they did wrong? yeah, that's long since passed. netflix is a natural to keep powering higher. i genuinely believe this is a much loved brand that can go higher. the next three standout performers in the s&p 500, best buy, hewlett-packard, and h&r block. i'm saying these all three could run out of gas. hey, look, best buy was left for dead coming into the year and suffered mightily at the hands of amazon. however, new management has come in, underperforming stores are being trimmed, and the company is showing a serious revival. that's it. i think the vast majority of the rally comes from a simple theme. best buy's not going under. the cash flow and the balance sheet are stronger than people think, certainly stronger than when its erstwhile competitor circuit city succumbed to the dark force that was amazon. i want you to call best buy the last man standing. hewlett-packard's very similar to best buy. after the debacle that was the autonomy acquisition the endless cash stream coming from its war with dell, so many cheaper versions of the personal computer as well as the declining consulting business and not so hot margins in the printer business, the company's been able to streamline, meaning fire a lot of people, and get the balance sheet back in shape courtesy of the short-handed work of ceo meg whitman. but hewlett-packard like best buy seems more of a bounceback candidate and not a growth story, as it did fall 44% last year, that's the worst in the dow jones averages. in other words, the stock was left for dead. turned out to be alive. but you know, you can't get that far from intensive care without some real earnings momentum, you can't cut your way into revenue growth. i don't see any. when i examined the run of h & r block, i came up snake eyes, just didn't see any reason why this stock should be up more than the 3508% it was up for this quarter. let alone reason to think about why it went up at all. i think it's a sell. okay. which brings you to one of the most intriguing leaders in the first quarter. i reviewed this for the last two years and couldn't find a reason to recommend it. no more. i now see it. it's called micron. symbol moo. this semiconductor stock has been a victim of the company's focus on also ran technology. notably the d-ram. dynamic random access memory. where there's been a tremendous competition and for years and years and years incredible pricing pressure! but amazingly there's been a sudden shakeout of players in this game. ♪ hallelujah two years ago there were seven companies trying to take share from each other in this low-end memory chip business. now there are only three, and micron's becoming in the second biggest behind samsung courtesy of acquisition of elpida. which is an amalgam of manufacturers mitsubishi -- ever declining average selling prices. they call them a.s.p.s. the result, a 38% jump in d-ram revenues which led to an overall increase in revenues and a legitimate upside surprise from a company that had been a serial downside surpriser! i think micron's not done. in fact, i think micron goes higher. maybe much higher. it's the best spec of the whole group. m.u. focus. celgene's been a favorite of ours for some time. profiled it last week. despite its 47% increase in the first quarter this stock can continue to run on the strength of new drug approvals coming up in the fall and a multiple of the out years or 2015, 2016. do you know that celgene actually has a lower multiple in next year's numbers than the slow and steady bristol-myers, which is an actionalertsplus.com stock? and i like it a lot. there's no question celgene should be trading at a premium and not a discount. people like the yields so much they're blinded by the bristol-myers light. tenet health is intriguing. saw a lot of the hmos exploit it after the bell because it looked like the government gave them a little medicare managed play. the affordable care act is going to be heavily favoring hospitals, though. and i expect as we get closer to 2014 this stock's going to keep moving higher since it's still nowhere near where it traded at the earlier part of the last decade. tenet's not a favorite of mine but the hospital and hospital-related stocks do continue to soar. two of the remaining stocks in the top ten, marathon petroleum and avon products might have a tough time repeating their performance but neither's expensive. marathon's problems might be a reduction in its source of cheap crude as rail and pipelines alleviate the glut of petroleum in the midwest and finally you're taking the crude to where it's needed, where the producers can make a bigger profit, namely the gulf coast. it's not bad, though. avon's a comeback story. it too had gone down far too much after that disaster experience that was the reign of former ceo andrew young. new management's come in but there's only so much you can do in the first couple quarters. that said i think that she's going to solve the numerous investigations. i think they're going to finish above the price they currently finished the quarter. i'm not down on avon. i just think it needs a little time. by the way, don't forget, who was the chairman of avon? fred hassan. who brings good things every time he goes somewhere? fred hassan. former ceo of schering-plough. finally, in what may be the best for last or at least the one that has the potential to be as strong as micron, i want you to consider the stock of a blue chip that finished in the top. that's safeway. you've probably shopped there. there are multiple catalysts here. i've always thought this division would potentially be worth as much as the entire company especially when the company was faltering. yes. safeway hopes to sell off $200 million worth of its highly profitable fast growing black hawk business. the offering led by goldman sachs. safeway's been an incredibly shareholder friendly stock. they bought back 57 million shares in 2012 alone. that's 20% of the market capitalization. meanwhile the company's been meeting the challenge of whole foods with its own line of organics and even after the stock's 45% run last year for just 11 times earnings. i'm calling that a bargain. here's the bottom line. the first quarter brought some big wins for the s&p. and i think that netflix, micron, celgene, and safeway have a lot further to run with micron and safeway being the two best bets to continue powering higher in 2013. it is not too late for them. and given micron's d-ram consolidation and safeway's blackhawk spinoff, it just might be early. don't move. the lightning round's coming up next. i know what you're thinking... transit fares! as in the 37 billion transit fares we help collect each year. no? oh, right. you're thinking of the 1.6 million daily customer care interactions xerox handles. or the 900 million health insurance claims we process. so, it's no surprise to you that companies depend on today's xerox for services that simplify how work gets done. which is...pretty much what we've always stood for. with xerox, you're ready for real business. it's delicious. so now we've turned her toffee into a business. my goal was to take an idea and make it happen. i'm 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. it is time. it is time for the "lightning round" on cramer's "mad money" play to this sound and then "lightning round's" over. are you ready, skee-daddy? time for the "lightning round" on cramer's "mad money." start with tim in minnesota. tim? >> caller: boo-yah, skee-daddy. minnesota, land of 10,000 frozen lakes. what's your thoughts on priceline? >> priceline is an inexpensive stock. we like the acquisition. let's go to joe in connecticut. joe. >> caller: ba-ba-ba-boo-yah, jim. >> nice stuttering boo-yah. >> caller: happy eight years to you. the stock i want to ask you about is progenics. they've been doing good the last few weeks. >> it's a $5 stock. it's been screaming. it is a nice spec stock. i'm not going to go against it. eric in michigan. eric. >> caller: dr. cramer. big boo-yah to you from grand valley state university. >> excellent. >> caller: my question's about alaska airlines, alk. >> i like the airlines, they're all pulling back. but the one i want to be in is us airways because of the merger with amr. let's go to matt in texas, please. matt. >> caller: easter bunny boo-yah to you, jimbo. >> terrific. >> caller: i want to know about hanger. hgr. >> i like hanger. it used to be hanger orthopedics. it's got a great business in prosthetics. i think the stock can go higher. jim in florida. >> caller: boo-yah for you, mr. cramer. >> okay. >> caller: i rung it out at the register a couple months ago. i see it was upgraded today. with the expansion of paypal and growth in foreign markets like india should i get back on the bus? >> i think the stock's got to cool down. multiple upgrades today. let it come down to 53, 54, and then pull the trigger. and that, ladies and gentlemen, is the conclusion of the is the conclusion of the "lightning round"! ♪ you know i've been a big fan of the pipeline operators as a way to play the north american oil and gas renaissance. but last week the industry had a rude awakening when an exxonmobil pipeline ruptured near little rock, arkansas on friday night, causing what the epa describes as a major oil spill. that's two days after a train carrying oil derailed in minnesota and spilled 30,000 gallons of crude. so far the pipeline stocks haven't been hurt by any negative pin action here, which is pretty amazing given the coverage of that. but it did make me wonder, are the pipeline stocks riskier than we thought? what happens if a pure play pipeline operator has an oil spill and you own it? that could put your money in a dangerous situation. so i started asking myself, would it be smarter to invest your money in a company that pipes something a little less toxic, like water? that's when you i realized we need to pick a company with the longest crude oil pipeline system on the continent enbridge against the country's largest publicly traded water utility, american water works, in order to see which one is a better buy. these are two very different businesses but they both run on pipes, on transporting liquids from one place to another. however, if the pipes burst at american waterworks you just get wet. worst case, some sewage comes out. but while sewage might stink it's 100% natural, unless you've been eating a very bizarre diet. and it's a heck of a lot easier to clean up than an oil spill. so which is the superior stock, enbridge or american water works? we just spoke with the ceo the other day. there is no easy answer. it's another of those cases where you need to ask not which is the better stock but which is the better stock for you? are you a slow and steady conservative investor who doesn't like risk? in that case you should avoid enbridge and the very real risk of oil spills. in july 2010 the company spilled more than 20,000 barrels of crude into a tributary in the kalamazoo river in michigan. nearly three years later enbridge is still doing epa-mandated cleanup. for risk-averse investors the right choice is american water works. we just had the ceo of this water utility on last week and it's clear the company has a lot going for it. american water works has slower growth than enbridge with a 7.9% long-term growth rate. even smaller dividend, 2.4% but it's a lower risk play and it's expanding rapidly for a utility. american water works is benefitting from a number of different trends here. cash strapped towns and cities are increasingly privatizing their water and waste at water utility systems in order to raise money. the vast majority of these are still government owned 84% for water and 98% for waste water, which gives american water works a lot of room to expand via tuck-in acquisitions. 89% of the revenues come from regulated utility business. company's also trying to move into ancillary water businesses like pumping water for shale drilling. if you're looking for lower risk stick with american water works. however, if you're a little more aggressive, if you're the kind of person who doesn't blanch when they see an oil spill like we had this weekend, then enbridge is the stock to own. this company is the lowest cost transporter of oil in north america. it controls slightly more than half of all canadian crude imports to the united states. put another way, about 15% of all u.s. oil imports flow through enbridge's pipes. and the truth is enbridge has a much stronger growth trajectory than american water works. 12.6% long-term growth rate while awk is growing at just a 7.9% clip. enbridge has fabulous visibility, meaning it's easy to see how much money they're going to earn many years into the future. building pipelines takes time, even when the government doesn't get in the way. right now we have all this newfound oil and gas but it's in hard to reach places, much of it trapped in the middle of the country, some of it far west of canada. and we need a tremendous amount of new pipe to get this oil to the coast where most of our refinery capacity is. for the moment companies are using trains, trucks, even barges to move their oil, but these methods are all more expensive than pipelines and these companies will switch once new pipelines have been built. given the tremendous demand for pipelines, i'm not surprised that enbridge says it sees, this is a huge number, $35 billion worth of investment opportunities from last year through 2016 and the company already has 27 billion of commercially secured growth projects. you know what they will do? these projects will allow the company to consistently grow its earnings and therefore raising its dividend payout. >> buy buy buy! >> it now has a 2.7% yield. that's higher than american water works and the company is a serial dividend raiser over the last decade enbridge has increased its payout at an annual growth rate of 12% per year. the reason why the yield's so low is because the stock keeps moving up. if we're going to view enbridge as a utility just like american water works then maybe it makes sense to do an apples to apples comparison on valuation. awk sells for 17.3 times next year's earnings with a 7.9% long-term growth rate while enbridge sells for 22.3 times next year's numbers with a 12.6% growth rate. that means american waterworks is trading at nearly 2.2 times growth. that's a sky-high valuation. i never like to pay more than twice the growth rate. enbridge is at 1.77. that is not cheap but it's not too expensive either. here's the bottom line. if you're a conservative investor who can't abide the thought of a potential oil spill causing your pipeline stock to get hammered, then stick with american water works. but for everyone else i think we have to recognize that aside from the spill risk, these pipeline operators are actually pretty secure, consistent companies with terrific growth opportunities, which is why for those of you who aren't super risk averse i say go buy some enbridge. "mad money's" back after the break. >> coming up, comeback kid? not everyone's been a winner on wall street this year. in fact, some have been downright ugly. but could some of these stocks be ready to go from worst to first? don't miss which shares have caught cramer's eye. oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at ducktherapy.com. the s&p's 500 first quarter losers are a motley bunch. the collapse of cliffs natural resources takes your breath away with the coup de grace being morgan stanley's devastating iron ore sales could be cut in half by the competition. this dovetails perfectly with the decline of u.s. steel off 18%, collapse in iron is heavily weighted toward the making of steel which has proven to be a nightmare business in 2013. quite a difference from the run-up to the top of the s&p in 2007, 2008, where u.s. steel was a leader. vaulting from 80 to 191 during a period of phenomenal chinese expansion and a decent construction market in the u.s. those are long since past. sure, anything can turn -- and cliffs was upgraded by goldman from a sell to hold at the end of the quarter but that smelled more like a victory lap than anything else. other losers in the quarter, apollo, parent of university of phoenix. apollo looked on the surface to be a terrific beat, ended up being widely planned. and of course apple, nonstop tailspin. another 12, 13 today. but the two losers in the top ten that could come back to be winners, the first is akamai. the streaming video company reported a surprising shortfall. that was then met with a colossal amount of insider buying. i don't care if there's a smattering of buying but it did seem as if every exec and board member bought stock with any cash they had. you know what? that's proven to be an important tell six months later. as the work i've done shows there's not a single instance where the decline was repeated after that kind of multiple insider buying. many instances where you received spectacular returns put down akamai. i think that one could work. however, the stock that most intrigues me among the losers is newfield exploration. that declined 16% for the quarter on a horrendous guide-down of the value of its properties, one that almost equaled chesapeake and its snake eyes feel. that said if you don't own it the decline has put new feet into the bargain basement territory. remarkable growth in liquids via some of the terrific drilling in the bakken and woodford shale plays. woodfield hired goldman sachs to sell sell some prime acreage in china and malaysia to focus on liquids growth in the u.s. third there's no reason to think one company can't come along and buy the whole thing if goldman can attract a suitor. eagleford and bakken is hard to come by. stat oil and hallicon resources has been willing to pay lately. we know many companies are trying to switch to less natural gas and more liquids. it's the way to go. the good news here is natural gas has begun to move up thanks to a shortage in drilling and colder than usual weather. at least for this time of year. i'm not saying i want petroleum companies to give up the search. i'm saying the run in all natural gas producer southwestern cannot be ignored. put simply, this decline in newfield i'm calling it a huge opportunity. the ignominious write-down is now behind them. i say newfield exploration is the biggest bargain among the losers of the first quarter, and one worth taking. stay with cramer. flying is old hat for business travelers. the act of soaring across an ocean in a three-hundred-ton rocket doesn't raise as much as an eyebrow for these veterans of the sky. however, seeing this little beauty over international waters is enough to bring a traveler to tears. we're putting the wonder back into air travel, one innovation at a time. the new american is arriving. we don't let frequent heartburn come between us and what we love. so if you're one of them people who gets heartburn and then treats day after day... block the acid with prilosec otc and don't get heartburn in the first place! 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plus, when you look at the other years when we came out in the first quarter with a full head of steam every year, that's right, every year we finished up by the end. so what was with all the gloom today? did you see it like i did? i mean, what was that? >> the house of pain. >> s&p backsliding .54%. nasdaq down -- i'm sorry, .45%. nasdaq nose diving .87%. that was a downer. dow fell only six points but that was aided by a last-second gain in united health on news of a positive change in medicare reimbursement rules. most of the day, though, it felt like a hangover. that no one wanted to get over. from around the first quarter. felt like the dollars were out in full force today. everything from getting the jump on the sell in may crowd. [ booing ] to worries about when europe opens because remember, it was closed. to qualms about the cold weather in march and how it upset the retail trade. you know what? all that stuff, that's just one more reason for you to focus on individual stocks. and what the companies behind them are doing to bring out value irrespective of these big macro concerns. now, near the end of last y y i put together a list of ten companies i told you that i felt were seriously undervalued versus the market, and i said these companies are companies that shouldn't just be standing there, they should be doing something! they weren't selling in may and going away stocks! they weren't stocks that hung on every word about europe like the cyprus thing. no! they wouldn't be dinged by dirty russian money caught up in the spin cycle without any chance to be laundered even or folded and put on hangers. these were stocks that didn't need the chinese housing market to stay alive with pleasure. they didn't get affected if the bubble's pricked over there. they weren't going to be quarantined or sequestered or whatever it is that's supposed to hurt yosemite sam and close yellowstone national park. isn't that stephen king's new book, "the sequester"? with the first quarter in the bag we've got to review how they're doing because i think these are still some of the most fertile stocks out there. in the aggregate, don't just stand there, do something cohort spectacular performance. from november 29 whth i started recommending them through the end of the first quarter, and i got pounded on these stocks almost every day during the first quarter. they have taken off like rockets at cape canaveral, wherever rich people are shooting off rockets these days. the don't just stand there mob is up 23.9% versus the s&p 500's 10.2%. wow. smoking. winner? hess. which just today announced the sale of its russian unit to lukewell for 2.5 billion. hess has been under siege since the beginning of the year and is now going to $73 and change from the $50 price tag where it was -- when i suggested that if hess didn't do something to bring out value someone else would. sure enough, a hedge fund outfit called elliott management has put intense pressure on hess to unlock its potential. and that's xwhaktly what hess is doing. don't forget the company recently sold a small position on the eagleford shale, remember that's the most bountiful shale in america, including the bakken. to sanchez sn, which is still stuck right where it was when the deal was done. that's stupid. i think sanchez is a -- >> buy buy buy. >> who's next? nobody believed that decker's could come back from the depths it had fallen at the beginning of the year. plunged from $117 in 2011 all the way down to $38 at the time i added it into the don't just stand there mob. turns out that decker's had plenty of life left in it courtesy of a cold winter and a dramatic decline in the price of fleece. that's the key fluctuating ingredient. the stock went all the way to the 20s. but no one ever catches the bottom or the top. this stock has racked up a 45% gain since we said it shouldn't just stand there. but bizarrely, 30% of the stock's float remains short. people are still betting against this thing. i think a reinvigorated decker's has a lot of room to maneuver and if it doesn't i still believe it is a natural for vf corp. to take a run at this company. in order to bolster its reputation as a fixer-upper of older seemingly tired brands. just like it did successfully with timberland. manitowoc, that bizarre amalgam of food, service, equipment and cranes. rallying 33%. that might be enough to keep tout of harm's way of activist investors. i still believe the company could be on course to break itself up. that's when you -- what i said it could double. but in the interim when you check with the regional banks as we do all the time you do get the impression that commercial real estate construction is coming back, and that's right up manitow manitowoc's alley. don't forget, there's about 15 different condominium buildings coming up in brooklyn alone. boy, the construction's on cease-fire for 2014. mine safety aprice pliens is up 29% since this incredibly boring no one cares about stock except for me, it was included on our list. and that's because of earnings. after painful adjustment from expansion to europe this company which is the premier independent safety appliance and power firm out there remains in the sights of the honeywell, of dupont, of 3m, all of which have expressed interest in the sector but not yet the company. i can't believe that dst, that's dog sam tom, hasn't separated itself into financial services that help brokerage houses with record keeping and a fast-growing record keeping company for life insurance annuity. as i said they should. and i said they should get rid of the rest of the real estate. that way they would be able to stay independent. how is it able to stay independent? perhaps because it's up 24% and then another 52-week high today. home and security. the company has not felled compelled to spin out its security and storage segment including master lock from its kitchen and bath unit. what a natural. it should be done. i think by mid-year they take a run at this company if only to have less ex-poerkz to the hobbled european market and fortune would be wise to break itself up before it gets swallowed up. i think they think the 22% is gain. i think what we've seen so far is not enough. and i think the house industry is on fire, there's more to run. here's the latest blue chip round. and it's been a horse. i'm talking about j&j. johnson & johnson, up 18% since its selection. this company, which my charitable trust proudly owns, is still being cleaned up by its powerful ceo alex gorsky. so far all the big pharmas which have gone out of the way to create value, whether it's brittle myer or pfizer or schering-plough which sold itself to merck after cramer fav ceo and now author fred hassen decided there's no more value left to create. it's time for j&j to follow in the footsteps and split into the fast growing pharma business, the cash flow machine which is consumer products and the troubled but profitable medical device business. meanwhile, the company's still got that 3% yield, attractive alternative to bonds especially when you factor in the favorable tax for dividends and the aaa balance sheet. reliant tech, atk, the defense company, would be up at all considering the sequester, i would have been shocked. yes. like wichita. schocker. 16% gain. it's posted. it's completely remarkable. if you're a defense contractor, you can pick this stock up for a song. less than $3 billion. i think it's possible. now, we keep hearing cautionary comments about the numbers that bed bath & beyond will report. that's kept a lid on the stock. will the lid come off after urban outfitters reported agubz after the close? no. i think this stock stays here if only for a matter of time before a private equity firm says all right, that's enough, let's just buy the darn thing. doesn't take it out of the cross-of these aggressive buyout firms. they're always looking for something to do. finally, the one laggard in the group is amazingly a stock that we have just liked from when the show began. haines celestial. hain. underwear's selling better than organic food! anyway, this one's flat since we included it in the don't just stand there cohort. the whole organic segment seems to be hostage to whole foods, which acts terribly, and the short sellers have been swarming endlessly around hain, a company ceo irwin simon built with acquisitio acquisitions. is it time to spin off the non-food offerings? it's been enough of a laggard that i think something could good could happen. here's the bottom line. these ten stocks have been on the move far more than the broader stock market. ever since we anointed them as companies that should unlock their hidden value. right now their strong performances kept the activists at bay except for hess even though they're all big in the market except tore bed bath and hain. i think the outperformance is just beginning. these stocks are all still worth buying with maybe the exception of hess and the only reason i've cooled on hess is that with today's sale of its russian properties it definitely lessens the chance for an acquirer to come in and buy the whole darn thing. i want to go to brian in florida, please. brian. >> caller: cramer! >> yeah. >> caller: i love you! >> love you back! >> caller: all right. what about these electric cars? what about tesla motors? talk to me. >> all right. i'll talk to you. this fellow musk, he's arrogant as all get out, but i'm beginning to believe. tesla reported some numbers. i know it's only a few cars. but boy, they're really just -- they're clobbering the expectations. and meanwhile, the short sell s sellers, tesla looks like the real deal. for mow. don't just stand there, do something! the ten companies that were undervalued that didn't matter about europe, didn't matter about the s&p, didn't matter about the etfs, they're up with a vengeance. and you know what? i think they just started. "mad money" will be right back. >> coming up, all this week cramer's checking up on the strongest trends in medical science for companies in the fight against rare diseases. tonight don't miss two stocks that could keep your portfolio in tiptop shape. and later, first of four? the first quarter's over, and it's been the best one for investors since 1998. cramer's looking through wall street's best and worst to find which stocks may be able to keep up their winning ways. plus, oil versus water. they're laying the groundwork for the next leg of this company's economic recovery. but which of these companies could engineer growth in your portfolio? don't miss this pipeline powered face-off. all coming up on "mad money." >> don't miss a second of "mad money." follow @jimcramer on twitter. have a question? tweet cramer. #madtweets. send jim an e-mail to madmoney@cnbc.com. or give us a call at 1-800-743-cnbc. miss something? head to madmoney.cnbc.com. 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[ male announcer ] one pill each morning. 24 hours. zero heartburn. all last all last week i talked to you about the past and future of the pharmaceutical industry. these days the stong stodgy old big pharma names they're mostly places to put your money in if you happen to be looking for nice safe dividends. i call them fixed income equivalents. but back in the mid '90s big pharma was synonymous with growth and these stocks traded at sky-high price to earnings multipleses. and now i think there's a whole new generation of drug companies ready to take up the mantle, to become what big pharma was in the '90s, fast-paced growth stocks that seem downright unstoppable. they used to go up almost every single day. now, last week i highlighted the larger biotechs, celgene, gilead, biogen, and regeneron. last one a little controversial but i've got to tell you it's moving on up. i'm far from finished, though, exploring this theme. this week we're going to take a closer look at some liflt smaller drug stocks that, yes, are far more speculative but have some promising drug pipelines and bright futures. for starters we have to talk about one of my favorite areas in all of pharma, the orphan drug space. if you're a biotech company you want orphan drugs, no doubt about it. for those who don't remember, what's an orphan? an orphan drug is one that treats an incredibly rare disease, not that many people have. how rare? in the united states it's a disease that afflicts less than 200,000 people. and in europe one that occurs in no more than .045 of the population. one reason is the fda tends to go much easier on orphan drugs because they know there aren't any other alternatives for people with these rare diseases. second, once orphan drugs get approved, the companies that make them are allowed to price these medications truly at astronomical levels. we're talking drugs that can cost hundreds of thousands of dollars a year. because again, the people with these rare diseases don't have any other choice and they cost the system, the health care system -- a lot of times their treatments involves hundreds of thousands of dollars of care. from one of these hmos. so they actually are, believe it or not, a bargain. meanwhile, the government provides orphan drug developers with all sorts of incentives because otherwise no drug companies would even bother to treat these diseases. you end up with enhanced patent protection, clinical research, years of marketing exclusivity. in short, orphan drugs are the sweet spot of the industry. but if all that isn't enough to convince you, how about we consider my two favorite orphan drugs at the moment? alexion and biomarin. i first recommended these names about 2 1/2 years ago, in october of 2010, and since then alexion has rallied an astounding 183%. biomarin has rallied 181%. these are fantastic moves. we liked orphan drugs almost since the show began. i think these two stocks, believe it or not, even after these runs, have a lot more room to go higher. so let's start with alexion, alxn. that's an $18 billion conditioner $95 stock. right now alexion has just one drug on the market and i know that's going to freak you out. but listen to me. solaris is a blockbuster. okay? this is an orphan drug that used to treat several ultra rare blood conditions. known as pnh, paul nancy harry, which when left untreated can lead to anemia, clotting, and death. that's why solaris is among the most expensive drugs on the market with a price point that's, don't blanch, about $500,000 a year. if you have this disease, you need to keep taking the drugs for the rest of your life. plus it has multiple indications, something else we love when it comes to drug company products. a rare but deadly kidney disease driven by genetic mutations. and the opportunity for this disease is at least as big as the complex of blood diseases solaris was initially approved for. it's expected to generate an astounding $1.5 billion in sales. that is up 33% from last year. that's amazing growth. and this is still a growing franchise. it's been on the market for pnh the blood disorder since 2007. sought growth in europe and the united states could be slowing on that front, but there's still plenty of up side coming from the rest world, places like turkey, brazil, russia, korea. and for the second indication, the rare kidney disease solar yisis was only launched to treat that one 18 months ago in the u.s. and the european launch is coming in the second half of this year. so just when these two indications, this drug should continue to fuel alexion's rapid growth for as far as the eye can see. plus the company's testing it for a host of other rare conditions. we could start seeing results in some of these studies sometime this year. and it's expected to file for proofl tuz it for another type of kidney dysfunction in the near future. $2.35 billion in sales to the drug's peak. in short alexion is an entire pipeline in this one amazing drug. and beyond solaris alexion also has a treatment for rare, sometimes fating metabolic bone disease. that's in phase 2 trials right now. that's in the out years. but you know what? the thing i most like about this stock, it sold off more than 19 points from its high of last autumn. two main reasons for this pullback. back in october the company reported a quarter many people viewed as disappointing because the sales were in line with the street's estimates rather than beating them. however, i think this is a case where the analysts got too aggressive and didn't model the quarter correctly as i'm notal at all worried about this drug's growth going forward. the second issue is more recent. at the end of last week alexion got an fda warning letter from its rhode island manufacturing facility that makes solaris. now, alexion has plenty of solaris supply and over the next couple weeks they'll make changes in the production process that makes the problem go away. sounds expensive. 33% growth rate. that's actually a bargain. how about one that we've had the ceo on, i recommend like? it's called biomarin. smaller orphan drug way $7.7 billion market capitalization and no profits to speak of. but i think biomarin has a very promising future. the company specializes in developing enzyme replacement therapies for rare genetic diseases. remember, these are orphan drugs. and these treatments typically cost patients or their health insurance providers somewhere over $300,000 a year. right now biomarin has two drugs on the market for metabolic disorder known as mps, mary paul sam, that can cause horrific progressive damage at the cellular level if left untreated. biomarin's partnered with sanifield on the drugs aldurazyde. this owns all the rights to the second mps drug, naglizyde which could do 300 million in sales in by 2015. and it has the treatment for -- i'm going to mispronounce if in th. fennelketarunim-a. which can cause several developmental problems as well as neurological issues. this drug will only do $100 million in sales by -- remember, this is a giant pass teesh. you have all these drugs that come together for some very big sales. now, biomarin is a bountiful pipeline. and just today, just today the company submitted vimazin to the fda which is a treatment for another metabolic disorder. if this orphan drug gets approved, might do 4 million in annual sales by 2018. plus last week biomarin told us they'd be starting phase 3 trials of their drug for pomp disease by the end of the year. and the company has new more effective fennel ket nurin drug that's entering phase 3 next quarter. this company as you know when we had the ceo on has more irons in the fire than almost any orphan drug we follow. biomarin less than two oibs off its highs. the company has so many shots on goal. the move is far from over. here's the bottom line. the future of pharma is in these ultra rare orphan diseases that require, unfortunately, very expensive drugs to treat. and the best of the orphan drug names are alexion for a bargain at these levels after this pullback and biomarin for a stock that gives you multiple ways to win. admittedly, not billion-dollar drugs, but altogether certainly possibility for billions. let's go to mark in wisconsin, please. mark. >> caller: yeah, jim. my question is about immunogen. and recently they got approval from the fda for one of their drugs, and the process to deliver that drug. my question is about what do they have in the pipeline and what are their prospects for europe and asia? and thanks for everything you do for us little people, jim. >> we had, as you'll recall, we had mr. juneius on, dan juneius. and there's a bunch of things immunogen's got going for it. they don't have all the rights for this first drug. we were liking it at 11.50 for this tdm-1. but it does have a less than optimal royalty agreement. that's what really got us down. but it does have some other things going on. and those were -- the reason why i'm not just spouting their names, if you remember, they were all -- immunogen and then a number. but they were for ovarian cancer and for lymphoma. and i thought they sounded very promising. let's go to don in pennsylvania, please. don. >> caller: boo-yah, dr. cramer, from beautiful bucks county. >> holy cow. i was there this weekend, man. it looked better than ever. >> caller: it's fabulous. it's fabulous. dr. cramer, my ticker is achn. i know the pipeline, and i'm just wondering whether it's a good time to add to my position or hold tight. >> well, we are big believers in trying to solve the problem of hep c, of hepatitis c, and that is why we have been such strong believers in the stock of gilead. i'd rather see you in that. the orphan drug companies are in a sweet spot and our two favorites right now are alexion because of that remarkable pullback off the facility that it had in britain just doing the number and not beating the number. and then biomarin, where we had the ceo on and i think they've got so much in the pipe that you've got to own, one or another. they're both speculative. after the break i'll try to make you some more money. >> coming up, first of four? the first quarter's over, and it's been the best one for investors since 1998. cramer's looking through wall street's best and worst to find which stocks may be able to keep up their winning ways. but i wondered what a customer thought? describe the first time you met. you brought the flex in... as soon as i met fiona and i was describing the problem we were having with our rear brakes, she immediately triaged the situation, knew exactly what was wrong with it, the car was diagnosed properly, it was fixed correctly i have confidence knowing that if i take to ford it's going to be done correctly with the right parts and the right people. get a free brake inspection and brake pads installed for just 49.95 after rebates when you use the ford service credit card. did you tell him to say all of that? no, he's right though... since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at ducktherapy.com. the first the first quarter's in the books. i say so what? hey, listen, all we care about on this show is where stocks are going, not where they're coming from. i can't make money off the pass. it goes to the first quarter, so goes the rest of the year. which would suggest that this year will be pretty darn fabulous. again, i don't care. i want to know which stocks are going to lead us. so let's look at the top ten performers in the s&p 500 for the first quarter. in this cohort i see plenty of repeat coming. i think these stocks remain fertile ground for more price appreciation. get your pencil and paper out. we're going over the winners, and i've got some surprises here. first up, we've got netflix as the leader in the s&p 500 for quarter number one. that's up more than 100%. despite its run, i think the stock has a strong chance of repeating its excellent performance. netflix has several. not all obvious trends going for it but i'm going to detail them because i know a lot of people love this stock. those trends are very much, i think, in their infancy. first, if you see netflix as a rival, even as an enemy, the major producers of content have decided tone doris it as a friend. the company's been an endless source of payments fought majors? n. exchange for programming. beyond that as independent networks which are doing incredibly well produce more series like the walking dead, down-ton abbey, louis, "mad men," or original netflix productions like "house of cards," the only real way to crack into them is by subscribing to netflix. got to know where to win. it's way cheaper than buying all those dvds for people at home. let's take the case of "walking dead." 5 million people a week now watch that show. but frankly, it is impenetrable unless you start at the beginning. i mean, why aren't they going to the cdc? why aren't they going to fort bragg? well, you've got to start at the beginning, for heaven's sake! anyway, you binge it. you binge view via netflix. and that assures you you're up to speed. the second reason why this heavily shorted stock can continue its ascent, netflix, just like discovery communications, directv, and all the cable companies, it's a housing play! others more homes are built, cable, dish, and netflix get hooked up. it's a natural tailwind. don't forget, when you buy that new tv, it's got the netflix clicker at the bottom of it. finally, i still believe that netflix remains a takeover target, most particularly for apple, which needs mobile content offering as well as something proprietary to run on apple tv. that stock goes down $13, they ought to be thinking how do we reverse that? netflix. meanwhile, this one. microsoft, which is still trying desperately to be cooler. this gies dancing on a table. we want cool product, not good taste in tuna. anyway, this could become cool once it bid $13 billion for this $10 billion company. don't rule it out. why should this monster stay independent with its 27 million subscribers and steve ballner desperate to leave a legacy? especially when those numbers are growing so quickly after it paerd the company flubbed the client relationship. can anyone remember what they did wrong? yeah, that's long since passed. netflix is a natural to tick higher. i genuinely believe this is a much loved brand that can go higher. the next three standout performers in the s&p 500, best buy, hewlett-packard, and h & r block. i'm saying these all three could run out of gas. hey, look, best buy was left for dead coming into the year and suffered mightily at the hands of amazon! however, new management has come in, underperforming stores are being trimmed, and the company is showing a serious revival. that's it. i think the vast majority of the rally comes from a simple theme. best buy's not going under. the cash flow and the balance sheet are stronger than people think. certainly stronger than its erase whil competitor circuit city succumbed to the dark force that was amazon. i want you to call best buy the last man standing. hewlett-packard's very similar to best buy. after the debacle that was the autonomy acquisition the endless cash stream fritz war with dell, so many cheaper versions of the personal computer as well as the declining consulting business in not so hot margins in the printer business, the company's been able to streamline, meaning fire a lot of people, and get the balance sheet back in shape courtesy of the short-handed work of ceo meg whitman. but hewlett-packard like best buy seems more of a bounceback candidate and not a growth story. as it did fall 44% last year, that's the worst in the dow jones averages. in other words, the stock was left for dead. turned out to be alive. but you know, you can't get that far without some real earnings momentum, you can't cut your way into revenue growth. i don't see any. when i examined the run of h & r block, i came up snake eyes, didn't see any reason why this stock should be up more than the 3508% it was up for this quarter. let alone reason to think why it went up at all. i think it's a sell. okay. which brings you to one of the most intriguing leaders in the first quarter. i reviewed this for the last two years and couldn't find a reason to recommend it. no more. i see it. micron. symbol moo. this semiconductor stock has been a victim of the company's focus on also ran technology. notably the d-ram. dynamic random access memory. where there's been a tremendous competition and for years and years and years incredible pricing pressure! but amazingly there's been a sudden shakeout of players in this game. ♪ hallelujah two years ago there were seven companies trying to take share from each other in this low-end memory chip business. now there are micron's come in the second business behind samsung kurtd cy of acquisition of alpita. which is an amalgam of manufacturers mitsubishi -- ever declining average selling prices. they call them a.s.p.s. the result, a 38% jump in d-ram revenues which led to an overall increase in revenues and a legitimate upside surprise from a company that had been a serial down side surpriser! i think micron's not done. in fact, i think micron goes higher. maybe much higher. it's the best spec of the whole group. m.u. focus. celgene's been a favorite of ours for some time. profiled it last week. despite its-447% increase in the first quarter this stock can continue to run on the strength of new drug approvals coming up in the fall and a multiple of the out years or 2015, 2016. do you know that celgene has a lower multiple in next year's numbers than the slow and steady bristol-mye bristol-myers, which is an actionalertsplus.com stock? and i like it. celgene should be trading at a premium and not a discount. people like the yields so much they're blinded by the brist bristol-myers light. tenet health. saw a lot of the hmos exploit it after the bell because it looked like the government gave them a little medicare managed play. the affordable care act is going to be heavily favoring hospitals, though. and i expect as we get closer to 2014 this stock's going to keep moving higher since it's still nowhere near where it traded at the end of the last decade. tenet's not a favorite of mine but the hospital and hospital-related stocks do continue to soar. two of the remaining stocks in the top ten, marathon petroleum and avon products might have a tough time repeating their performance but neither's expensive. marathon's problems might be a reduction in its source of cheap crude as rail and pipelines alleviate the glut of petroleum in the midwest and suddenly you're taking the crude to where it's needed. where the producers can make a bigger profit, namely the gulf coast. it's not bad, though. avon's a comeback story. it too had gone down far too much after that disaster experience that was the reign of former ceo andrew wrung young. new management's come in but there's only so much you can do in the first couple quarters. that said i think she's going to solve the investigations. i think they're going to finish aboston price they currently finished the quarter. i'm not down on avon. i just think it needs a little time. by the way, don't work, who was the chairman of avon? fred hassett. who brings good things every time he goes somewhere? fred hassett. former ceo of schering-plough. finally, in what may be the best for last or at least the one that has the potential to be as strong as micron, i want you to consider the stock of a blue chip that finished in the top. that's safeway. you probably shopped there. there are multiple catalysts here. -- i've always thought this division would potentially be worth as much as the entire company especially when the company was faltering. yes. safeway hopes to sell off $200 million worth of its highly profitable fast growing black hawk business. the offering led by goldman sachs. safeway's been an incredibly shareholder friendly stock. they bought back 57 million shares in 2012 alone. that's 20% of the market capitalization. meanwhile the company's been meeting the challenge of whole foods with its own line of organics and even after the stock's run last year for 1u69 juft 11 times earnings. i'm calling that a bargain. here's the bottom line. the first quarter brought some big wins for the s&p. and i think that netflix, micron, celgene, and safeway have a lot further to run with micron and safeway being the two best bets to continue powering higher in 2013. it is not too late for them. and given micron's d-ram c consolidation and safeway's blackhawk spinoff, it just might be early. don't move. the lightning round's coming up next. this is $100,000. we asked total strangers to watch it for us. thank you so much. i appreciate it. i'll be right back. they didn't take a dime. how much in fees does your bank take to watch your money? if your bank takes more money than a stranger, you need an ally. ally bank. your money needs an ally. it is time. it is time it is time. it is time for the "lightning round" on cramer's "mad men" -- and then "lightning round's" over. are you ready, skee-daddy? time for the "lightning round" on cramer's "mad money." start with tim in minnesota. tim? >> caller: boo-yah, skee-daddy. minnesota, land of 10,000 frozen lakes. what's your thoughts on priceline? >> priceline is an inexpensive stock. we like the acquisition. let's go to joe in connecticut. joe. >> caller: ba-ba-ba-boo-yah, jim. >> nice stuttering boo-yah. >> caller: happy eight years to you. the second one i want to ask you about is progenics. they've been doing good the last few weeks. >> it's a $5 stock. it's been screaming. it is a nice spec stock. i'm not going to go against it. eric in michigan. eric. >> caller: dr. cramer. extreme boo-yah to you from grand valley state university. >> excellent. >> caller: my question's about alaska airlines, alk. >> i like the airlines, they're all pulling back. but the one i want to be in is us airways because of the merger with amr. let's go to matt in texas, please. matt. >> caller: easter bunny boo-yah to you, jim bo. >> terrific. >> caller: i want to know about hanger. hgr -- >> i like hanger. it used to be hanger orthopedics. great business in prosthetics. i think the stock with go higher. jim in florida. >> caller: boo-yah for you, mr. cramer. >> okay. >> caller: i rung it out at the register a couple months ago. i see it was upgraded today. with the expansion of paypal and growth in foreign markets like india should i get back on the bus? >> i think the stock's got -- multiple upgrades today. let it come down to 53, 54, and then pull the trigger. and that, ladies and gentlemen, is the new version of the "lightning round"! ♪ [ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. all on thinkorswim. it's not what you think. it's a phoenix with 4 wheels. it's a hawk with night vision goggles. it's marching to the beat of a different drum. and where beauty meets brains. it's big ideas with smaller footprints. and knowing there's always more in the world to see. it's the all-new lincoln mkz. but at xerox we've embraced a new role. working behind the scenes to provide companies with services... like helping hr departments manage benefits and pensions for over 11 million employees. reducing document costs by up to 30%... and processing $421 billion dollars in accounts payables each year. helping thousands of companies simplify how work gets done. how's that for an encore? with xerox, you're ready for real business. the little details. the little moments that make life truly amazing. that's why southwest worked hard on the little and big things to build a better in-flight experience featuring access to wi-fi, live tv, and updated cabins. getting there just got better. we are southwest. welcome aboard. you know you know i've been a big fan of the pipeline operators as a way to play the north american oil and gas renaissance. but last week the industry had a rude awakening when an exxonmobil pipeline ruptured near little rock, arkansas on friday night causing what the epa called a major oil spill. that's two days after a train carrying oil derailed in minnesota and spilled 30,000 gallons of crude. so far the pipeline stocks haven't been hurt by any negative pin action here which is pretty amazing given the coverage of that. but it did make me wonder, are the pipeline stocks riskier than we thought? what happens if a pure play pipeline operator has an oil spill and you own it? that could put your money in a dangerous situation. so i started asking myself, would it be smarter to invest your money in a company that pipes something a little less toxic like water? that's when you i realized we need to pick a company with the longest crude oil pipeline system on the continent and bridge against the country's largest publicly traded utility, american water works. in order to see which one is a better buy. two very different businesses but they both run on pipes, on transporting liquids from one place to another. however, if the pipes burst at american waterworks you just get wet. worst case some sewage comes out. but while sewage might stink it's 100% natural, unless you've been eating a very bizarre diet. and it's a heck of a lot easier to clean up than an oil spill. so which is the superior stock, enbridge or american water works? we just spoke with the ceo the other day. there is no easy answer. it's another of those case where's you need to ask not which is the better stock but which is the better stock for you? are you a slow and steady conservative investor who doesn't like risk? in that case you should avoid enbridge and the very real risk of oil spills. in july 2010 the company spilled more than 20,000 barrels of crude into a tributary in the kalamazoo river in michigan. nearly three years later enbridge is still doing epa-manned yailted cleanup. for risk aveshs investors the choice is american water works. we just had the ceo of this water utility on last week and it's clear the company has a lot going for it. american water works has slower growth than enbridge with a 7.9% long-term growth rate. even smaller dividend, 2.9% but it's a lower risk play and it's expanding rapidly for a utility. benefitting from a number of different trends here. cash strapped to understand and cities rin creasingly privatizing their water and waste at water utility systems in order to raise money. the vast majority of these are still government owned 84% for water and 98% for waste water, which gives american water works a lot of room to expand via tuckin acquisitions. 89% of the revenues come from regulated utility business company's also trying to move into ancillary water businesses like pumping for shale drilling. if you're looking for lower risk stick with american water works. however, if you're a little more aggressive, if you're the kind of person who doesn't blan when when they see an oil spill like we had this weekend, then enbridge is the stock to own. this company is the lowest cost transporter of i'm in north america. it controls slightly more than half of all canadian crude importers to the united states. put another way, about 15% of all u.s. oil imports flow through enbridge's pipes. and the truth is edge bridge has a much stronger growth trajectory than american water works. 12.6% long-term growth rate while awk is growing at 5i7.9% clip. enbridge has fabulous visibility, meaning it's easy to see how much money they're going teern many years into the future. building pipelines takes time, even when the government doesn't get in the way. right now we have all this newfound oil and gas but it's in hard to reach places much of it trapped in the middle of the country, some of it far west of canada. and we need a tremendous amount of new pipe to get this oil to the coast where most of our refinery capacity is. for the moment knz are using trains, trucks, even barges to move their oil but these methods are all more expensive than pipelines and these companies will switch once new pipelines have been built. given the tremendous demand for pipelines i'm not surprised that enbridge says it sees, this is a huge number, $35 billion worth of investment opportunities from last year through 2016 and the company already has 27 billion of commercially secured growth projects. you know what they will do? these projects will allow the company to consistently grow its earnings and therefore raising its dividend payout. >> buy buy buy! >> it has a 2.7% yield. that's higher than american water works and the company is a serial dividend raiser over the last decade enbridge has increased its payout at an annual growth rate of 12% per year. the reason why the yield's so low is because the stock keeps moving up. if we're going to view enbridge as a utility just like american water works then maybe it makes sense to do an apples to apples comparison or valuation. a.w.k. sells for 17.3 times next year's earnings with a 7.9% long-term growth rate while enbridge sells for 22.3 times next year's numbers with a 12.6% growth rate. that means american waterworks is trading at nearly 2.2 times growth. that's a sky-high valuation. i never like to pay more than twice the growth rate. enbridge is at 1.77. that is not cheap but it's not too expensive either. here's the bottom line. if you're a conservative investor who can't abide the thought of a potential oil spill causing your pipeline stock to get hammered, then stick with american water works. but for everyone else i think we have to recognize that aside from the spill risk these pipeline operators are actually pretty secure, consistent companies with terrific growth opportunities, which is why for those of you who aren't super risk averse i say go buy some enbridge. "mad money's" back after the break. >> coming up, comeback kid? not everyone's been a winner on wall street this year. in fact, some have been downright ugly. but could some of these stocks be ready to go from worst to first? don't miss which shares have caught cramer's eye. [ male announcer ] let's say you pay your guy around 2% to manage your money. that's not much, you think. except it's 2% every year. go to e-trade and find out how much our advice and guidance costs. spoiler alert: it's low. it's guidance on your terms, not ours. e-trade. less for us. more for you. arrival. with hertz gold plus rewards, you skip the counters, the lines, and the paperwork. zap. it's our fastest and easiest way to get you into your car. it's just another way you'll be traveling at the speed of hertz. the s&p's 500 first quarter losers are a motley bunch. the collapse of cliffs natural resources takes your breath away with the coup de grace being the cycle. iron ore sales could be cut in half by the competition. this dovestalz perfectly with the decline of u.s. steel off 18%, collapse in iron is heavily weighted toward the making of steel which has proven to be a nightmare business in 2013. quite a difference from the run-up to the top of the s&p in 2007, 2008, where u.s. steel was a leader. falling from 80 to 191 during a period of phenomenal chinese expansion and a decent construction market in the u.s. those are long since past. sure, anything can turn -- and cliffs was upgraded by goldman from a sell to hold at the end of the quarter but that smelled more like a victory lap than anything else. other losers in the quarter, apollo, university of phoenix. apollo looked on the surface to be a terrific beat ended up being widely planned. and of course apple nonstop tailspin. another 12, 13 today. but the two losers in the top ten that could come back to be winners, the first is ak mize. surprising shortfall. that was then met with a colossal amount of insider buying. i don't care if there's a smattering of buy but it did seem as if every exec. and board member bought stock with any cash they had. you know what? that's proven to be an important tell six months later. as the work i've done shows there's not a single instance where the decline was repeated after that kind of multiple insider buying. many instances where you received spectacular returns put down akamai. i think that one could work. however, the stock that most intrigues me among the losers is newfield exploration. that declined 16% for the quarter on a horrendous guide-dune of the value of its properties, one that almost equaled chesapeake and its snake eyes feel. that said if you don't own it the decline has put new feet into the bargain basement territory. liquids via some of the terrific drilling in the bakken and woodford shale plays. woodfield hired goldman sachs to sell sell some prime acreage in china and malaysia to focus on liquids growth in the u.s. third there's no reason to think one company can't come along and buy the whole thing if goldman can attract the suitor. eagle sxfrd bakken hard to come by. stat oil and hallicon resources has been willing to pay lately. we know many companies are trying to switch to less natural gas and more liquids. it's the way -- the good news here is natural gas has begun to move up thanks to a shortage in drilling and colder than usual weather. at least for this time of year. i'm not saying i want petroleum companies to give up the search i'm saying the run in all natural gas producer southwestern cannot be ignored. put simply this decline in newfield i'm calling it a huge opportunity. the ignominious writedown is now behind them. i say newfield exploration is the biggest bargain among the losers of the first quarter. and one worth taking. stay with cramer. oh, he's a fighter alright. since aflac is helping with his expenses while he can't work, he can focus on his recovery. he doesn't have to worry so much about his mortgage, groceries, or even gas bills. kick! kick... feel it! feel it! feel it! nice work! ♪ you got it! you got it! yes! aflac's gonna help take care of his expenses. and us...we're gonna get him back in fighting shape. ♪ [ male announcer ] see what's happening behind the scenes at ducktherapy.com. those who those who want to be able to cut the cost of medicare are going to be unbelievably shocked tomorrow when you s