good morning. welcome to "squawk on the street." i'm carl quintanilla with melissa lee, jim cramer and david faber. a day of unexpected earnings. europe, we'll talk more about this spanish auction that did go okay today. as you can see, most of europe is in the red. only the ftse hanging on to the green right now. >> this morning, morgan stanley and bank of america beating expectations but some argue it's all in the accounting. we'll tell you how to view the quarters. >> dupont, verizon in addition to amex last night, so far, very healthy. 77% of s&p companies are topping expectations. >> and that closely watched spanish debt auction goes, as carl describes it, okay. the ibex and euro are selling off today. more chatter that the medicine is wearing off right now. but we start off with banking and bank of america specifically. revenue also above consensus with the bank's provision for credit losses at the lowest level since the third quarter of 2007. but it's this whole issue of dva clouding earnings not just b of a but also morgan stanley. >> this has become a very difficult measure in terms of allowing us to look quickly through the numbers and understand them and do comparisons and well. we didn't always deal with dva. it has to do with the cost of the company's debt, its credit spreads. if it costs less to buy it back, you have to account for that as opposed to if it costs more -- >> meaning if the bank's doing better, it knocks down earnings. >> thanks. >> it's so stupid, right? >> and they're hoping to get rid of it. they are hoping, the cfos and the like, are hoping to move bass this. all that said, how did b of a look to you? >> b of a looked to me like there's a pulse to merrill lynch and that this was a merrill lynch quarter. i've always felt that at a certain point, merrill lynch would shine. we've been waiting and waiting and we got it. trading is merrill lynch. asset gathering is merrill lynch. you needed to see countrywide stop bleeding in order to show how good merrill is. this was that quarter. >> lone growth at bac down 2.9% quarter-on-quarter, the worst among the big lions. >> they don't have revenue, that's true. they don't have the revenue growth, i'm sorry, versus, say, a bbt. they do have severine. obviously using shorthand here. but this is a bank that was written off. the fact is they made two acquisitions within a couple of months of each other. countrywide almost put the institution in peril -- >> in complete and total peril. it's a wonder it made it through. when you do that, i feel obligated to -- >> i like it when you push faber to say "dumbest". >> it's competing for number one. aol, nextel, sprint. to your point, they seem to be moving past to it a certain extent. >> i think one of the reasons why this one had been so bad last year was they weren't able to move past it. montac, you have a merrill lynch figure who's moving up. you see the merrill lynch card. it's back. the bull is back. you see it on some of the branches that they have. i think that this is the reemergence of merrill. >> is it enough to support the run -- the fact that it has a pulse, is that enough to back a 58% run in the stock? >> only because it was knocked down so badly -- >> it should have never gone to the low point so it's a return to normalcy? >>. >> that's my thing. >> some say it's time to lighten up. would you do that? >> jpmorgan at 43, much cheaper. u.s. bancorp have been remarkable. bbt, people have to recognize that's going to be a major regional. those are all better than bank of america at 10. >> it's not as though they completely put behind them countrywide in terms of the mortgage putback issue. that continues to be a key for bank of america as opposed to some of the others. you saw a $2.5 billion litigation reserve taken by jpmorgan. bank of america, it's been a lot more throughout. as many times as they've tried to put that behind them with this overall resolution that has not worked, that's still hanging over the bank to a certain extent. >> do you like it more than citi? >> i'm a jpmorgan customer. >> that was diplomatic. >> good to see you shift back to a jeffersonian posture after antagonizing me -- >> i wasn't antagonizing you. >> don't tap me. those anger management courses don't last. >> yesterday it was lennin. today it's tutu. >> morgan stanley handily beat with its first-quarter numbers. revenue well above. morgan attributing the results to stronger wealth management revenue, lower costs. later this morning on "squawk on the street," david is going to have a live interview with the ceo of morgan stanley, james gorman. 11:15 a.m. eastern time. david, i wonder if you think gorman has taken some of the arguments by the critics today and stuffed it in their face? >> to a certain extent, they want these numbers to shine. i think they are very concerned they have to be about a potential moody's downgrade. they say $6.5 billion in total additional collateral would be needed. larry fink said yesterday, we may have to change our business relationships with certain firms, even though we don't think it's justified because of contracts we have in terms of counterparty risk. that's got to be a concern for morgan. but a good quarter of this will help. the arguments continue in terms of way a rating agency should have such influence -- >> morgan stanley balance sheet, so much better than during the crisis. exposure documents in europe, so much better than it was seven months ago. jpmorgan, balance sheet better. suddenly we have to worry about ratings agencies when morgan may have been teetering at one time and when jpmorgan was not a fortress? how can people make sense of this at home? it's dumb as wood to me. no offense to a fine company like we' like wirehauser who makes wood. >> actually god makes wood. never what people said it was -- morgan stanley stock not long ago was suffered significantly. a year ago this time, it was all the talk. they were never exposed to the extent they thought. to your point, they're taking it way down. back to merrill lynch you're talking about, morgan stanley smith barney is even bigger. >> for viewers who are waking up listening to this conversation going, what is dva, debt valuation adjustment. and for those who argue that banks use it when it helps and ignore it when it hurt, how do you explain it clearly? >> each quarter, they have to acknowledge what the cost of their debt is essentially. if it's been a bad quarter for banks and their bonds have traded off, their credit spreads widen. that's actually not a good thing. but it would cost them less to buy back their debt. that's the way i try to think about it. and therefore, they actually will get a dva adjustment positively, reflecting what had actually been a negative in the market. works the other way during better times when spreads are coming in, the cost of their debt to buy back would go up. why is that a part of these numbers? the accountants argue one way. but it makes it very difficult -- >> is it an honest picture, jim, of the health of the company? >> no, the health is much better. and morgan stanley at 17 does not make any sense to me. but it's very difficult to put a multiple on femoral earnings. you raise the point, people wake up and say, what's this dv snashgs they should say, give me some bbt. >> so go elsewhere -- some bank that doesn't have that sort of dva cloudiness on their balance sheet? >> if you want the mcdonald's of banks, go to same-store sales, which is u.s. bancorp. if you want the chipotle of banks, you go to bbt. if you wanted to know what banks are not awful, you have to look at same-store sales of branches. and that's unfathomable when you look at these banks -- >> these companies have always lacked transparency. if you want to try to understand it, read the quarterly filings and the annual report. but even then -- i always go back to merrill lynch which i did a lot of work on after the crisis or directly following it, looking back at their filings. you hardly ever saw the words "mortgage-backed security" in any of them. you would not have understood for the life of you what their real exposure was in the mortgage market in the united states of america and all the significant bets they made to that housing market. you wouldn't have been able to. >> so we go to a gilead or a vmware and an f5, talking about big data. we can revert to themes that are really shining this quarter, agriculture with dupont. i mention these because i need apples to apples. and i'm getting apples to kumquats here and i'm getting kumquats to tangerines. >> sounds delicious whatever it is. >> it's a fruit salad. i think that's what you should in the morning. >> would you make me one? >> make enough for everybody, while you're at it. it's easy enough to do one. do three. we want to continue on the earnings front. verizon posting first-quarter profits, 59 cents a share, beating the street by a penny. its wireless unit added 501,000 contract customers in the period. dupont earned $1.61 a share. >> our raw materials were up 7% for the quarter, for the year, we're pegging it at about 3%. that's below what we had set in january, about one percentage point below. certainly natural gas is down and that's a benefit. oil is up. so that's a negative. but all in all, we're going to see about 3% inflation on our raw materials this year. >> higher pricing, of course, has helped even though we have seen volumes go down in the chemical industry overall. agricultural, their biggest revenue driver for dupont, was up 18% in terms of sales. >> it's not your old dupont, which was a housing play and auto play. it is a codings play and doing quite well in codings. and this agriculture business is a health and welfare division. coleman has -- if you look at -- david mentioned looking at the annual reports. coleman talks about sustainability and health care, by talking about eating right and feeding the world. that's why that company can get a better p/e. people are paying more for those earnings than they used to. >> finally verizon, david, 501,000 on these wireless ads. a little bit below expectations. what's your take? >> i had a couple of conversations with investor this is morning. the wire line trends were not particularly good. the call has been on going. i haven't been able to be on it. there's a look at wireless segment ebitda right there. it's actually okay. wireless is better. the margins were better. the question is, you want to turn in your apple iphone, they're going to lengthen that period of time that you can actually get your upgrade. that goes back to the whole subsidy question we've been talking about. not a bad quarter. but the ebitda margin is always the key. wire line, we want to hear some things on the call. while at&t is usually more reflective of business activity and a better macro indicator, let's not forget verizon, i will come back and see what it is f they gave any color on the call about that part of the business because it can be an important broarometer for overall -- >> why is that still considered a key barometer here? >> they've got fios. that's 5 million wire-lined customers. and then there's your business customer who's in an office who has their full network of phones. that's why. it's less important. this is a wireless company, no doubt about it. but wire still contributes cash flow. >> that's the key to what i think people want to hear who own verizon. they're not hedge funds. they're people who want to hear, can dividend boost occur? i think that's in the cards because of how strong verizon is. the thing that worries the most, qualcomm can't produce its chips which makes people feel apple won't be able to do the iphone 5. people say is that going to hurt verizon's third and foushgt? that's extraneous. >> a bik word about spanish debt -- >> average revenue per user up about 3.6%, a little better than had been anticipated. it looks like we're fully penetrated in the northwest terms of wireless. >> we're done? >> it doesn't look as though we're going to add any new customers. in fact, the industry may show a loss in subscribers. >> no? >> i think that's interesting. >> finally happened. >> everybody's got one who needs one. >> you're going to cycle in on or off based on your ability to pay -- >> that's going to be some story. >> it's all a market share battle at this point. probably deserves more than just a quick mention. >> that's the big themes. we have to put earnings in context. they come over one at a time. we can say verizon a booming, yum! is booming. this idea that we're saturated, they have to come up with chip that is you put on your shirt and on your dog. machine-to-machine chips a la that spunk that's coming public. we can't have saturation. look at what happened to nokia. they're drowning in the river -- >> that's in the u.s. >> chip for your dog. like the fido 5000 or something. >> we have to go, but you mentioned spain. i haven't looked at the yields. i know the auction went okay. >> yeah. we'll talk about the results and some of the concerns in "the journal" today about whether some of the ltro medicine is running dry. we're going to be having live interviews with the ceos of morgan stanley, of priceline.com, of ebay, when "squawk on the street" returns live from post 9. [ wind howling ] [ technician ] are you busy? management just sent over these new technical manuals. they need you to translate them into portuguese. by tomorrow. [ male announcer ] ducati knows it's better for xerox to manage their global publications. so they can focus on building amazing bikes. with xerox, you're ready for real business. ♪ some of the stories we're squawking about ahead of the opening bell, weekly jobless claims fell. wall street was expecting a bigger decline. shares of human genome more than doubling in the premarket. it's rejected an unsolicited $2.6 billion takeover offer bid. and united health reporting profits of $1.31 a share in the first quarter thanks to a boost in health plan membership. tumi is going public here at the new york stock exchange today. but in case you wonder what it is? it's a peruvian ceremonial knife. it's amazing. in this morning's "squawk on the tweet" we ask you, in honor of tumi's fancy name, if you were starting up a luxury brand, what would be the muse for your company's name and why? tweet us and we'll share your responses throughout the morning. >> when you started the street, were there other names you thought about -- >> in order to get the domain, there was a guy who owned the street. and he said, listen, i know you want it. and i said, no, i'm going to go for "the avenue" and "the boulevard." i convinced him that all streets are created equal. he ran into a cul-de-sac. >> you swindled that one. >> exactly, all the way to the bank. >> it was a good one. "the avenue" would have been some name. coming up next, cramer's mad dash. find out what stocks is highlighting what he thinks about him. much more straight ahead. everything that i've gained in life has been because of the teachers and the education that i had. they're just part of who i am. she convinced me that there was no limit to what we could learn. i don't think i'd be here today had i not had a wonderful science teacher. a teacher can make a huge difference in a child's life. he would never give up on any of us. thank you dr. newfield. you had a big impact on me. you know, those farmers, those foragers, those fishermen.... for me, it's really about building this extraordinary community. american express is passionate about the same thing. they're one of those partners that i would really rely on whether it's finding new customers, or, a new location for my next restaurant. when we all come together, my restaurants, my partners, and the community amazing things happen. to me, that's the membership effect. that could adapt to changing road conditions. one that continually monitors and corrects for wheel slip. we imagined a vehicle that can increase emergency braking power when you need it most. and we imagined it looking like nothing else on the road today. then...we built it. the 2012 glk. see your authorized mercedes-benz dealer for exceptional offers through mercedes-benz financial services. properly inflated tires can increase fuel efficiency by three percent. that's about 8 cents a gallon, and that can really add up over the next few years. see, going green can save you green the more you know. ♪ welcome back to "squawk on the street." i'm mary thompson. just off the phone with morgan stanley's ceo. a couple of highlights from my conversation with her, the company says it is ready for any potential downgrade, that it can sustain any potential downgrade. keep in mind that moody's has suggested that it could cut the company's rating by about three notches. i asked her about an increase in net exposure to france, which was a concern by investors last year. she said it has mostly to do with client activity. the first-quarter strength came across all products and geographies, most importantly fixed income commodities and currency trading was up 34% once you take out dva. she said that was helped in great part by deeper relationships with the company's existing clients and asked whether or not morgan stanley would make a bid for the remaining 49% of the morgan stanley smith barney joint venture brokerage they hold with citi, she said when they submitted their capital plan to the fed, they only asked to buy the 14%, which is what the schedule that was first revealed asked for. this option comes in in june. and she said that remains on track. also on track to cut $1.4 billion in costs by 2014. carl, back to you. >> really good information, thank you so much, mary. we'll talk to james gorman of morgan stanley at 11:15 this morning. we begin in qualcomm saying fiscal q2 will not look as good. >> the call's going great and then they drop the boom. it's a manufacturing problem. they can't get enough chips. normally i would say it's a high-quality problem. dare i say that three months from now you're going to wish you didn't sell it. >> should clarify, q2 is what they just posted, guiding for fiscal q3. >> it's like it's going great and then it's holy cow, get me some alka seltzer. >> ebay? >> carl, i want you to think of ebay as that or this. the two greatest financial performers of our era are visa and mastercard and paypal belongs with them. >> a lot more opening bell in just about three minutes. zap technology. departure. hertz gold plus rewards also offers ereturn-- our fastest way to return your car. just note your mileage and zap ! you're outta there ! we'll e-mail your receipt in a flash, too. it's just another way you'll be traveling at the speed of hertz. on december 21st polar shifts will reverse the earth's gravitational pull and hurtle us all into space. which would render retirement planning unnecessary. but say the sun rises on december 22nd, and you still need to retire. td ameritrade's investment consultants can help you build a plan that fits your life. we'll even throw in up to $600 when you open a new account or roll over an old 401(k). so who's in control now, mayans? ♪ the debut of tumi here at the new york stock exchange. the maker of luxury luggage celebrating its debut at the nasdaq. jim, there are so many earnings reports out today. it's hard to kind of see the forest for the trees because we have so many individual data points. but overall, they are coming in better than expected. >> i think it's important to point out that the widely held names -- bank of america, verizon, dupont -- are doing quite well. there's a little excitement today obviously with a big speck like human genome. ebay widely considered to be a written off for dead resurrection story with paypal which is so, so strong. big data means there's so much data from a google or